inflation

Exchange Rates 03.10.2022 analysis

Key reports published in both US and Europe show that inflation continues to spiral and is at staggering levels. This prompted Credit Suisse to issue a gloomy outlook for the global economy, saying the worst is yet to come.

Exchange Rates 03.10.2022 analysis

The Department of Commerce released the latest inflation data, indicating that core PCE jumped 0.6% in August. This suggests that inflation is still intense and increasing, and may even be higher in the next months. Core labor costs, which excludes food and energy costs, also rose 4.9%, up 4.7% from forecasts.

Exchange Rates 03.10.2022 analysis

In Europe, inflation hit a new record high of 10% in September.

Exchange Rates 03.10.2022 analysis

CPI for the Eurozone differs from that of the US as year-on-year energy prices in the region were up 40.8%. In the US, there is a slight decline from 8.5% to 8.3%.

To address inflation, the Fed has implemented five consecutive interest rate hikes, but from last week's report, it is obvious that the aggressive measure is yet to bring inflation down. Vice Chairman Lael Brainard said the

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.
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.
That Wasn’t Much of a Down Day..

That Wasn’t Much of a Down Day..

Finance Press Release Finance Press Release 10.02.2021 15:55
Technically, the Dow and S&P snapped their 7-day winning streak.Technically.I hardly consider a decline of 0.03% and 0.11% for the Dow and S&P, respectively, a down day.Meanwhile, the Nasdaq and Russell saw a record close for who knows how many consecutive days.Can the market keep this up? Who even knows anymore. Everything seems to defy expectations and logic. Yeah, it's possible. But I'd be surprised if we don't see at least one sharp pullback before the end of the week.The sentiment is surely rosy right now. The economic recovery appears to be gaining steam, and the Q1 decline everyone predicted might not be as swift as we anticipated- if at all. President Biden's stimulus could officially pass within days as well and provide much-needed relief to struggling businesses and families.Have you seen the vaccine numbers lately, too? More people in the U.S. have now been vaccinated than total cases. On Monday (Feb. 8), vaccine doses outnumbered new cases 10-1. New daily COVID cases have also reached their lowest levels since October.With Johnson and Johnson's (JNJ) one dose vaccine candidate seemingly days away from FDA approval, the outlook is certainly more positive at this point than many anticipated.But we're not out of the woods yet, and three non-pandemic related factors still concern me- complacency, overvaluation, and inflation.Jim Cramer's "Seven Deadly Sins" from Mad Money Monday night (Feb. 8) reflect many of my concerns too:Source: CNBCYes, I know I keep saying to beware. I also know that earnings are on pace to rise by over 20% in 2021. Since 1980, only 12 years have earnings increased by 15% or more. Except for 2018, the market gained an average of 12% in all of those years.But consider some valuation metrics that scream “bubble.”As of February 4, 2021, the Buffett Indicator , or the ratio of the total US stock market valuation to the GDP, was at a level not seen since the dotcom bubble. If you take the US stock market cap of $48.7 trillion and the estimated GDP of $21.7 trillion, we're nearly 224% overvalued and 84% above the historical average.Keep in mind; this chart was dated February 4. This number has only grown since then. Tuesday (Feb. 9) was hardly a down day. If anything, it was plain dull.Fears of a bubble are genuine. The S&P 500’s forward 12-month P/E ratio is back to above 22 and well above the 10-year average of 15.8. The Russell 2000 is also back at a historic high above its 200-day moving average. Tech stock valuations are again approaching dot-com bust levels.Bank of America also believes that a market correction could be on the horizon due to signs of overheating.While I don’t foresee a crash like we saw last March, I still maintain that some correction before the end of Q1 could happen.Corrections are healthy and normal market behavior, and we are long overdue for one. They are also way more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).A correction could also be an excellent buying opportunity for what could be a great second half of the year.Bank of America also echoed this statement and said that “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and ‘as good as it gets’ earnings revisions.”The key word here- buyable.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one where I could help people who needed help, instead of the ultra-high net worth.With that said, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don't think that a decline above ~20%, leading to a bear market will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Small-Caps are Officially Overbought Figure 1- iShares Russell 2000 ETF (IWM)This pains me to write this because I love Russell 2000 small-cap index in 2021.But this is getting ridiculous now.As tracked by the iShares Russell 2000 ETF (IWM) , small-cap stocks have been on a rampage since November. Since the close on October 30, the IWM has gained nearly 50% and more than doubled ETFs' returns tracking the larger indices. What happened to the Nasdaq being red hot? This chart makes it look like an igloo.Since the close on January 29, the Russell has done just about the same again and gained 11.10%. It’s outperformed all the other major indices by a minimum of 5% in that period.Not to mention, year-to-date, it’s already up a staggering 18%.Small-caps are funny. They either outperform and underperform and can be swayed easily by the news. I foresaw the pullback two weeks ago coming for over a month, and unfortunately, I see the same thing happening now. But only for the short-term.I remain bullish due to aggressive stimulus, which could be put in motion this week.I also love small-cap stocks for the long-term, especially as the world reopens and this Biden agenda gets put in motion. It seems like things are finally trending in the right direction.For now, though, the index is once again overbought.The RSI is at a scorching 75, and I can't justify calling this a BUY or HOLD right now. It's an excellent time to take profits.SELL and take profits. If and when there is a deeper pullback, 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.
Platinum Begins Big Breakout Rally

Platinum Begins Big Breakout Rally

Chris Vermeulen Chris Vermeulen 10.02.2021 21:58
If you were not paying attention, Platinum began to rally much higher over the past 3+ days – initiating a new breakout rally and pushing well above the $1250 level.  What you may not have noticed with this breakout move is that commodities are hot – and inflation is starting to heat up.  What does that mean for investors/traders?DAILY PLATINUM CHART SHOWS CLEAR BREAKOUT TRENDFirst, Platinum is used in various forms for industrial and manufacturing, as well as jewelry and numismatic functions (minting/collecting).  This move in Platinum is more likely related to the increasing inflationary pressures we've seen in the Commodity sector coupled with the increasing demand from the surging global economy (nearing a post-COVID-19 recovery).  The most important aspect of this move is the upward pricing pressure that will translate into Gold, Silver, and Palladium.We've long suggested that Platinum would likely lead a rally in precious metals and that a breakout move in platinum could prompt a broader uptrend in other precious metals.  Now, the combination of this type of rally in Platinum combined with the Commodity rally and the inflationary pressures suggests the global markets could be in for a wild ride over the next 12 to 24+ months.This Daily Platinum chart highlights the recent upside breakout rally that has prompted a rally from $1050 to $1250+.  If this rally continues to target the 100% Fibonacci price extension, near $1300, then it will become very clear that Platinum is rallying away from other precious metals.  If this coincides with a continued general Commodity price rally, then we may start to see an inflationary cycle setting up that really change things – very quickly.This type of “triple-whammy” is very similar to the commodity/inflationary price rally that took place in the late 1970s and early 1980s.  For those of you that don't remember this trend, commodities started to rally in the early/min-1970s, prompting Gold to rally a low price near $100 (in 1976) to a higher level near $195 (in 1978) – but that was just the beginning.  After that rally stalled a bit, a bigger commodity price rally took place in 1979 that prompted a much bigger Gold price rally and started an inflationary price cycle that prompted the US Fed to take aggressive action in curtailing inflation.  Gold rallied from $169 in late 1978 to over $870 in early 1980 – a 420% increase.PLATINUM MAY LEAD A COMMODITY PRICE RALLYWe believe the rally in Platinum is a strong signal that a Commodity price rally is initiating and that an inflationary price cycle may be starting.  If our research is correct, evidence of this cycle phase will continue over the next 6+ months where commodities will continue to rally overall and where market inflation will become very tangible in the US and across the globe.  This will prompt the US Fed, and global central banks, to begin to take immediate action to contain any potential run-away inflation concerns – obviously tightening monetary policy and raising interest rates.Be sure to sign up for our free market trend analysis and signals now so you don’t miss our next special report!Platinum may rally above $1500 if this rally extends to the 200% Fibonacci price extension level – and that move may come very quickly.  This weekly Platinum chart, below, shows a green arrow that points to the 200% Fibonacci price extension level (near $1500). Remember, the commodity price rally in 1979/1980 lasted more than 24 months and prompted a big 400%+ rally in Gold.  If that type of rally were to happen today, Gold would rally to levels near $7500 (or higher).Pay attention to what is happening with Platinum and you'll start to understand the inflationary/institutional demand for this unique metal.  If our research is correct, we may see a new rally in Gold and Silver fairly quickly as Platinum acts as a catalyst for an inflationary cycle paired with a Commodity rally (very similar to the 1979 to 1980 rally). It is a great time to be an active trader in these markets.  One of our recent BAN trades just closed out for a 47% gain.  These big trends may be here for the next 24+ months and 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 BAN Trader Pro technology.  The BAN Trader Pro technology does all the work for us.Don’t miss the opportunities in the broad market sectors over the next 6+ months, which will be an incredible year for traders of the BAN strategy.  You can sign up now for my FREE webinar that teaches you how to find, enter, and profit from only those sectors that have the most strength and momentum. Learn how the BAN strategy can help you spot the best trade setups because staying ahead of sector trends is going to be key to success in volatile markets. For those who believe in the power of trading on 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 with daily market reports, research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my premium subscribers.Have a great day!
Will Tesla Charge Gold With Energy?

Will Tesla Charge Gold With Energy?

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

A Sleepy Week for the Indices?

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

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

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

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

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

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

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

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

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

For stocks, has the “Rational Bubble” Popped?

Finance Press Release Finance Press Release 19.02.2021 15:38
In keeping with last week’s theme, the market has mainly traded sideways this week. However, that correction I’ve been calling for weeks? We have potentially started.While I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.Bank of America also echoed this statement and said last week that “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”Yes, the sentiment is still positive. That won’t change overnight. Vaccines seem more effective than we thought, especially against other variants of the virus. All that extra stimulus money and record low-interest rates could keep pushing stocks to more records and stimulate pent-up consumer spending. It’s not like the Fed is going to switch this policy up anytime soon, either.They don’t call it a stimulus for nothing.For weeks we’ve likely been in a rational bubble. Dhaval Joshi , the chief European investment strategist for BCA Research, has said that low bond yields meant the rally we’ve seen with stocks made sense.“Rational, because the nosebleed valuations are justified by a fundamental driver. And not just any fundamental driver, but the most fundamental driver of all – the bond yield.”Take a look at this chart comparing a “rational bubble” to an “irrational bubble.”But now? Things have possibly changed. Complacency, valuations, surging bond yields, and inflation concern me.They’re all connected. But look especially into the 10-year yield. It’s hovering around 1.30% for the first time in over a year.Why is this concerning?Rising interest rates=less attractive stocks.Look at this other chart. Forward P/E ratios are continuing to rise along with bond yields. In high-growth sectors, such as tech, this is especially concerning. The chart shows, in fact, that tech earnings yields have now been surpassed by the bond yield plus a fixed amount.The only three ways this can be resolved are for stock prices to decline, bond yields to fall, or earnings to rise and improve stock valuations. Considering earnings season is over, only options 1 or 2 seem feasible in the near-term.You combine this info with the Buffet Indicator (Total US stock market valuation/GDP), and you have a market that could be 228% overvalued.I’ve already correctly called the Russell 2000’s pullback after how much it’s overheated. Since February 9th, when I switched the call to a sell, it’s declined roughly 3.40%.More could follow.Look. Corrections are healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.A correction could also be an excellent buying opportunity for what could be a great second half of the 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 to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. A Needed Cool Down for the Russell 2000Figure 1- iShares Russell 2000 ETF (IWM)Since February 9, the Russell 2000 small-cap index has lagged behind the other indices after significantly overheating. I switched my call to a SELL then, and it promptly declined by 3.40%.I do love small-caps for 2021, though, and I really like this decline. If it declines about another 1.50%, I’d feel more confident switching the call to a BUY.As tracked by the iShares Russell 2000 ETF (IWM) , small-cap stocks have been on a rampage since November.Since the market’s close on October 30, the IWM has gained nearly 44.5% and more than doubled ETFs’ returns tracking the larger indices. If you thought that the Nasdaq was red hot and frothy, you have no idea about the Russell 2000.Not to mention, year-to-date, it’s already up a staggering 14%.Judging from these types of returns, the IWM’s decline since February 9 is hardly shocking. But for me, it’s still not enough, outside of switching the call to a HOLD.It pains me not to recommend you to BUY the Russell just yet. I love this index’s outlook for 2021. Aggressive stimulus, friendly policies, and a reopening world could bode well for small-caps. Consumer spending, especially for small-caps, could be very pent-up as well.But we need to just hold on and wait for it to cool down just a little bit more for a better entry point.HOLD. If and when there is a deeper pullback, BUY for the long-term recovery.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
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.
The Yield Harbinger for Stocks

The Yield Harbinger for Stocks

Finance Press Release Finance Press Release 22.02.2021 15:32
Indices, for the most part, closed fractionally higher to end the week. But a new headwind for stocks could be more concerning - rising bond yields.That correction I’ve been calling for weeks could have potentially started.While I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.Bank of America also echoed this statement and said last week that “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”But rather than looking at the past, let’s take a look at what’s on tap this week to get you ready for what could potentially be a volatile week ahead.This coming week, be on the lookout for the January leading indicator index, durable goods orders, and personal income and spending.On Tuesday, we will also receive the February Consumer Confidence Index; on Wednesday, the Census Bureau will release upcoming home sales. On Friday, the University of Michigan will release its Consumer Sentiment Index.Of course, as we’ve seen in weeks past, jobless claims from the previous week will be announced on Thursday too. After outperforming the last few weeks, the jobless claims announced last Thursday (Feb. 18) grossly underperformed and reached their worst levels in nearly a month.Earnings season has been outstanding but is winding down now. Be on the lookout this week for earnings from Royal Caribbean (RCL) on Monday (Feb. 22), Square (SQ) on Tuesday (Feb. 23), Nvidia (NVDA) on Wednesday (Feb. 24), and Virgin Galactic (SPCE) and Moderna (MRNA) on Thursday (Feb. 25).We have the makings of a volatile week, and as I mentioned before, a possible correction.Look. Don’t panic. We have a very market-friendly monetary policy, and corrections are more common than most realize. Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.While it won’t happen for sure, I feel like it’s inevitable because of how much we have surged over the last few months.A correction could also be an excellent buying opportunity for what could be a great second half of the 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 to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Will the Russell 2000 Overheat Again?Figure 1- iShares Russell 2000 ETF (IWM)The Russell 2000 popped on Friday (Feb. 19) after seeing a bit of a pullback since February 9. Between February 9 and the close on February 18, the Russell 2000 lagged behind the other indices after significantly overheating. I switched my call to a SELL then on the 9th, and it promptly declined by 3.40% before Friday’s session.I foresaw the pullback but cautiously saw a rally and switched to a HOLD call before it popped over 2% on Friday (Feb. 19).I do love small-caps for 2021, and I liked the decline before Friday. However, I feel like the index needs a minimum decline of 5% from its highs before switching it to a BUY.As tracked by the iShares Russell 2000 ETF (IWM) , small-cap stocks have been on a rampage since November.Since the market’s close on October 30, the IWM has gained nearly 47.56% and more than doubled ETFs’ returns tracking the larger indices. If you thought that the Nasdaq was red hot and frothy, you have no idea about the Russell 2000.Not to mention, year-to-date, it’s already up a staggering 16.38%.It pains me not to recommend you to BUY the Russell just yet. I love this index’s outlook for 2021. Aggressive stimulus, friendly policies, and a reopening world could bode well for small-caps. Consumer spending, especially for small-caps, could be very pent-up as well.But we just need to hold on and wait for it to cool down just a little bit more for a better entry point.HOLD. If and when there is a deeper pullback, BUY for the long-term recovery.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
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
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.
Shortest Stock Correction Ever

Shortest Stock Correction Ever

Finance Press Release Finance Press Release 24.02.2021 15:32
What a day that was. What started off looking like a sea of red not seen in months ended with the Dow and S&P in the green.It was an overdue plummet- at least that’s what I thought at the start of the day. The Dow was down 360 points at one point, and the Nasdaq was down 3%.But by the end of the day, Jay Powell played the role of Fed Chair and investor therapist and eased the fears of the masses.The Dow closed up, the S&P snapped a 5-day losing streak, and the Nasdaq only closed down a half of a percent!You really can’t make this up.The day started gloomily with more fears from rising bond yields.Sure, the rising bonds signal a return to normal. But they also signal inflation and rate hikes from the Fed.But Powell said “not so fast” and eased market fears.“Once we get this pandemic under control, we could be getting through this much more quickly than we had feared, and that would be terrific, but the job is not done,” Powell said .He also alluded to the Fed maintaining its commitment to buy at least $120 billion a month in U.S. Treasuries and agency mortgage-backed securities until “substantial further progress is made with the recovery.While the slowdown (I’d stop short of calling it a “downturn”) we’ve seen lately, namely with the Nasdaq, poses some desirable buying opportunities, there still could be some short-term pressure on stocks. That correction I’ve been calling for weeks may have potentially started, despite the sharp reversal we saw today.Yes, we may see more green this week. But while I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.Bank of America also echoed this statement and said, “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”With more earnings on tap for this week with Nvidia (NVDA) on Wednesday (Feb. 24) and Virgin Galactic (SPCE) and Moderna (MRNA) on Thursday (Feb. 25), buckle up.The rest of this week could get very interesting.Look. Don’t panic. We have a very market-friendly monetary policy, and corrections are more common than most realize. Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.A correction could also be an excellent buying opportunity for what could be a great second half of the 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 to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- To Buy or Not to Buy?Figure 1- Nasdaq Composite Index $COMPWhat a difference a few weeks can make!Before, I was talking about the Nasdaq’s RSI and to watch out if it exceeds 70.Now? As tracked by the Invesco QQQ ETF , the Nasdaq has plummeted by 4.5% since February 12 and is trending towards oversold levels! I hate to say I’m excited about this recent decline, but I am. This has been long overdue, and I’m sort of disappointed it didn’t end the day lower.Now THAT would’ve been a legit buying opportunity.While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony. Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after today, I feel more confident in the Nasdaq as a SHORT-TERM BUY.But remember. The RSI is king for the Nasdaq . If it pops over 70 again, that makes it a SELL in my book.Why?Because the Nasdaq is trading in a precise pattern.In the past few months, when the Nasdaq has exceeded 70, it has consistently sold off.December 9- exceeded an RSI of 70 and briefly pulled back.January 4- exceeded a 70 RSI just before the new year and declined 1.47%.January 11- declined by 1.45% after exceeding a 70 RSI.Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.I like that the Nasdaq is below the 13500-level, and especially that it’s below its 50-day moving average now. I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.But the pullback hasn’t been enough.Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Tech Holds the Key to S&P 500

Tech Holds the Key to S&P 500

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

How Bond Yields Are Affecting Gold

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

Why Tech Is Giving Me Jeepers – Watch Out, Gold

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

Gold Declines Despite Powell’s Easy Stance

Finance Press Release Finance Press Release 25.02.2021 18:13
Powell testified before Congress and reiterated the Fed’s dovish stance, but nevertheless, gold continued to slide.On Tuesday, Powell testified before the United States Senate Committee on Banking, Housing, and Urban Affairs. He offered no big surprises, so the markets were little changed. But the price of gold ended that day with a slight loss, as the chart below shows – perhaps just because Powell didn’t surprise, and struck a dovish tone.Anyway, what did the Fed Chair say? In his prepared remarks, Powell acknowledged the improved outlook for later this year . As I noted in the last edition of the Fundamental Gold Report about the recent FOMC minutes , a more optimistic Fed about the U.S. economy is bad news for gold.Additionally, Powell downplayed concerns about the recent rises in the bond yields (see the chart below), calling them “a statement of confidence” for an improving U.S. economic outlook, or “a robust and ultimately complete recovery”. This is also a negative comment for the yellow metal, as it would prefer the Fed reacting more aggressively to the increasing rates, and, for instance, implementing the yield curve control . The higher the yields, the worse it is for gold, which is a non-interest bearing asset.However, Powell also made some dovish comments . First of all, he reiterated that the Fed’s easy stance will last very long – longer than it used to be in the past . This is because the Fed implemented last year a new monetary framework, according to which the U.S. monetary policy will be informed by the assessments of shortfalls of employment from its maximum level, rather than by deviations from its maximum level. Moreover, the Fed will seek to achieve inflation that averages two percent over time. These changes imply that the Fed will not tighten monetary policy solely in response to a strong labor market, but only to an increase in inflation . However,But inflation must not merely reach two percent – it should rise moderately above two percent for some time in order to prompt the U.S. central bank to taper the quantitative easing and hike the federal funds rate .The second reason why the interest rates will stay lower for longer is that the economy is a long way from the Fed’s employment and inflation goals, and “it is likely to take some time for substantial further progress to be achieved”. On Wednesday, Powell acknowledged that it may take more than three years to reach these goals. This means that the Fed will treat any possible increases in inflation this year as temporary and will leave interest rates unchanged.Implications for GoldWhat does Powell’s testimony imply for the gold market? Well, gold bulls may be disappointed as the Fed Chair didn’t sound too dovish . He neither announced an expansion in the quantitative easing, nor the yield curve control, nor negative interest rates , nor a “whatever it takes” approach. And it seems that the yellow metal needs such things right now in order to survive – just like fish need water.However, the rising bond yields could become a problem at one point for the Fed. If they continue to rise, Uncle Sam will not be happy, and the Fed will have to step into the market to buy government bonds. The central bank and Treasury are good old friends and the close relationship between Powell and Yellen may only strengthen this beautiful friendship – and support gold prices.Moreover, the increasing bond yields (despite an ultra-dovish Fed) imply that reflation trade is strong. So far, investors just expect a return of inflation to a moderate level, but given the enormous surge in the broad money supply (see the chart below) and Biden’s mammoth fiscal plan, the risk of overheating is non-negligible.It would be really strange if such an aggressive monetary expansion wouldn’t affect the prices. As one can see, the growth in the M2 money supply is 2.5 times faster than during the Great Recession . Actually, we are already seeing inflation – but in the asset markets, not the CPI . The stock and house prices are surging. The commodity sector has also already been gaining and gold may follow suit .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
Dead Cat Bounce? Bears Aren‘t Taking Prisoners Now

Dead Cat Bounce? Bears Aren‘t Taking Prisoners Now

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

Finally- the Stock Market Tanks

Finance Press Release Finance Press Release 26.02.2021 16:07
Surging bond yields continues to weigh on tech stocks. When the 10-year yield pops by 20 basis points to reach a 1-year high, that will happen.Tuesday (Feb. 23) saw the Dow down 360 points at one point, and the Nasdaq down 3% before a sharp reversal that carried to Wednesday (Feb. 24).Thursday (Feb. 25) was a different story and long overdue.Overall, the market saw a broad sell-off with the Dow down over 550 points, the S&P falling 2.45%, the Nasdaq tanking over 3.50%, and seeing its worst day since October, and the small-cap Russell 2000 shedding 3.70%.Rising bond yields are a blessing and a curse. On the one hand, bond investors see the economy reopening and heating up. On the other hand, with the Fed expected to let the GDP heat up without hiking rates, say welcome back to inflation.I don’t care what Chairman Powell says about inflation targets this and that. He can’t expect to keep rates this low, buy bonds, permit money to be printed without a care, and have the economy not overheat.He may not have a choice but to hike rates sooner than expected. If not this year, then in 2022. I no longer buy all that talk about keeping rates at 0% through 2023. It just can’t happen if bond yields keep popping like this.This slowdown, namely with the Nasdaq, poses some desirable buying opportunities. The QQQ ETF, which tracks the Nasdaq is down a reasonably attractive 7% since February 12. But there still could be some short-term pressure on stocks.That correction I’ve been calling for weeks? It may have potentially started, especially for tech. While I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of March could happen.I mean, we’re already about 3% away from an actual correction in the Nasdaq...Bank of America also echoed this statement and said, “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”Look. This has been a rough week. But don’t panic, and look for opportunities. We have a very market-friendly monetary policy, and corrections are more common than most realize.Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.A correction could also be an excellent buying opportunity for what could be a great second half of the 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 to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- To Buy or Not to Buy?Figure 1- Nasdaq Composite Index $COMPThis downturn is so overdue. More pain could be on the horizon, but this road towards a correction was needed for the Nasdaq.Before February 12, I would always discuss the Nasdaq’s RSI and recommend watching out if it exceeds 70.Now? As tracked by the Invesco QQQ ETF , the Nasdaq has plummeted by nearly 7% since February 12 and is trending towards oversold levels! I hate to say I’m excited about this recent decline, but I am.While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony the other day (even if I don’t totally buy into it). Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after its recent slowdown, I feel more confident in the Nasdaq as a SHORT-TERM BUY.The RSI is king for the Nasdaq . Its RSI is now under 40, which makes it borderline oversold.I follow the RSI for the Nasdaq religiously because the index is simply trading in a precise pattern.In the past few months, when the Nasdaq has exceeded an overbought 70 RSI, it has consistently sold off.December 9- exceeded an RSI of 70 and briefly pulled back.January 4- exceeded a 70 RSI just before the new year and declined 1.47%.January 11- declined by 1.45% after exceeding a 70 RSI.Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.I like that the Nasdaq is almost the 13100-level, and especially that it’s below its 50-day moving average now.I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Will There Be Roaring Twenties for Gold?

Will There Be Roaring Twenties for Gold?

Finance Press Release Finance Press Release 26.02.2021 16:59
The 2020s might be less roaring than the 1920s, which seems like good news for gold.The United States is strongly polarized, with blue versus red, liberals versus conservatives, and so on. People are divided along many lines, but the biggest division line is between those who count decades from 0 to 9 and those who count them from 1 to 10. It is intuitive for many people to adopt the first method, especially that we think of decades as ‘the 20s’, ‘the 30s’, and so on. However, the catch is that there was no Year Zero, so the first decade of the common era was years 1 to 10. Following this logic, the current decade started on January 1, 2021, not January 1, 2020.So, I feel fully entitled to investigate how gold will behave in the new decade. The issue is especially interesting as some analysts claim that we are entering the Roaring Twenties 2.0. Are they correct?On the surface, there are some similarities. The 1920s were a decade that followed the nightmare of World War I and the Spanish Flu pandemic . It was a time of quick economic growth (the U.S. GDP grew more than 40 percent in that period) and rapid technological innovation fueled predominantly by the rising access to electricity and big improvements in transportation (automobiles and planes).Fast forward one century and we land in the 2020s, which is a decade following the nightmare of the coronavirus pandemic . There are hopes for an acceleration in technological progress driven mainly by the rising scope of remote work, digital solutions, cloud computing, artificial intelligence, Internet of Things, 5G networks, robotization, super-batteries, electric vehicles, and so on. And given the pent-up demand and months spent in lockdowns, consumers are ready to congregate and spend!However, there are good reasons to be skeptical about the narrative of the Roaring Twenties 2.0 . The era of post-war prosperity was fueled by the return to the normalcy in the sphere of economic policy. I refer here to the fact that after WWI, there was a successful transition from a wartime economy to a peacetime economy. In contrast, in the aftermath of the Great Recession , there is a gradual transition from the peacetime economy to a wartime economy, that was only accelerated during the epidemic and the Great Lockdown .In particular, both the government spending and the fiscal deficits were sharply reduced in the post-war era. In consequence, the U.S. public debt declined, especially in real terms. Similarly, the Fed reversed its monetary policy and allowed for monetary contraction (and quick recession) in 1919-20 to reverse wartime inflation .In other words, the tighter monetary and fiscal policies led to an environment of economic prosperity. Also helpful for the U.S. were developments such as trustbusting and an economic recovery in Germany after its hyperinflation – all developments that will not replay in the 2020s.In contrast, neither the fiscal policy nor the monetary policy are going to normalize anytime soon , even if the COVID-19 pandemic is brought under control. The national debt has risen by almost $7.8 trillion under Trump’s presidency – a level that rivals Italy’s. The debt-to-GDP ratio has soared, as the chart below shows. And Joe Biden doesn’t worry about deficits – instead, with his plan of $1.9 trillion economic stimulus, he is going to balloon the public debt even further by increasing government spending.But maybe we shouldn’t worry about the debt? After all, after WW2, the public debt was even higher, but the economy didn’t collapse – actually, it grew so rapidly that the debt-to-GDP ratio diminished significantly. Yup, that’s correct, but after the pandemic, the economy will not recover as quickly as in the aftermath of WW2. Oh, and by the way, the economy grew its way out of debt only thanks to several years of high inflation .Therefore, the current complacency and naïve belief in low- interest rates and debt-driven economic recovery makes the scenario of the Roaring Twenties 2.0 not very likely, despite all the fantastic technological progress we are observing. So, instead of acceleration, we could rather observe an economic slowdown due to the poor economic policy that hampers the expansion of the private sector. Indeed, the recent report by the World Bank warns about the lost decade: “If history is any guide, unless there are substantial and effective reforms, the global economy is heading for a decade of disappointing growth outcomes.” This is good news for the gold market.But even if the Roaring Twenties 2.0 do happen, it wouldn’t have to be very bad for the yellow metal. It’s true that the 1920s was a period of wealth, prosperity, and decadence in which people didn’t think about preserving capital and investing in safe-haven assets such as gold . In contrast, there was a lot of risk-taking fueling the boom in the stock market. However, the Roaring Twenties were an inflationary period of debt-driven growth that ended in the systemic economic crisis called the Great Depression – and gold can shine in such an macroeconomic environment .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 – Final Sell-Off

Gold – Final Sell-Off

Florian Grummes Florian Grummes 27.02.2021 14:37
Precious metal and crypto analysis exclusively for Celtic Gold on 27.02.2021Gold has been in a long and tenacious correction for nearly seven months already. On Friday the gold-market shocked traders and investors with yet another bloodbath similar to the one seen end of November last year. However, this capitulation probably means: Gold – The Final Sell-Off Is Here!ReviewThe price for one troy ounce of gold hit a new all-time high of US$2,075 on August 7th, 2020 and has been in a tough correction since then. After a first major interim low on November 30th at around US$1,764, gold posted a rapid yet deceptive recovery up to US$1.959. Since that high point on January 6th, the bears have taken back control.Obviously, the two sharp sell-offs on January 6th and January 8th had demoralized the bulls in such a strong way that they have not been able to get back on their feet since then. And although the bullish forces were still strong enough to create a volatile sideways period in January, since early February the bears were able to slowly but surely push prices lower.Just yesterday day gold finally broke below its support zone around US$1,760 to 1,770, unleashing another wave of severe selling into the weekly close. Now after seven month of correction, spot gold prices have reached a new low at US$1,717.© Crescant Capital via Twitter ©Tavi Costa, February 18th 2021On the other hand, the relative strength of silver remains strikingly positive. In this highly difficult market environment for precious metals, silver was able to trade sideways to up since the start of the new year. The same can be said of platinum prices.Overall, the turnaround in the precious metals sector has not yet taken place but seems to be extremely close. Since the nerves of market participants were significantly tested either with a tough and tenacious volatile sideways stretch torture or with sharp price drops like yesterday, most weak hands should have been discouraged and shaken off by now. At the same time, however, the sector has become pretty oversold and finally shows encouraging signs of being a great contrarian opportunity again.Technical Analysis: Gold in US-DollarGold in US-Dollars, weekly chart as of February 27th, 2021. Source: TradingviewOn the weekly chart gold lost the support of the middle trend line with the large uptrend channel in January. With a weekly close at US$1,734 the bears are clearly in control. However, Friday lows around US$1,725 hit pretty much exactly the long standing 38.2% fibonacci retracement from the whole wave up from US$1,160 to US$2,075. Hence, gold is meeting strong support right here around US$1,715 to US$1,730. Looking at the oversold weekly stochastic oscillator the chances for a bounce and an important turning point are pretty high. Hence, the end of this seven-month correction could be very near.However, only a clear breakout above the downtrend channel in red would confirm the end of this multi-month correction. Obviously, the bulls have a lot of work to do to just push prices back above US$1,850. If the Fibonacci retracement around US$1,725 cannot stopp the current wave of selling, then expect further downside towards the upper edge of the original rather flat uptrend channel in blue at around US$1,660. The ongoing final sell-off can easily extend a few more days but does not have to.In total, the weekly chart is still clearly in a confirmed downtrend. Prices have reached strong support at around US$1,725 and at least a good bounce is extremely likely from here. However, given the oversold setup including the sell-off on Friday there are good chances that the correction in gold is about to end in the coming week and that a new uptrend will emerge.Gold in US-Dollars, daily chart as of February 27th, 2021. Source: TradingviewOn the daily chart, the price of gold has been sliding into a final phase of capitulation since losing contact with its 200-MA (US$1,858). Not only predominating red daily candles but also lots of downtrend-lines and resistance zones are immersing this chart into a sea of red. That itself should awake the contrarian in any trader and investor. However, it is certainly not (yet) the time to play the bullish hero here as catching a falling knife is always a highly tricky art. But at least, the daily stochastic oscillator is about to reach oversold levels. Momentum remains bearish for now of course.Overall, the daily chart is bearish. Last weeks sell-off however might be overdone and has to be seen in conjunction with the physical deliveries for February futures at the Comex. However, a final low and a trend change can only be confirmed once gold has recaptured its 200-MA. This line is currently far away, and it will likely take weeks until gold can meet this moving average again. Further downside can not be excluded but it should be rather shallow.Commitments of Traders for Gold – The Final Sell-Off Is Here!Commitments of Traders for Gold as of February 27th, 2021. Source: CoT Price ChartsSince the beginning of the year, commercial traders have reduced their cumulative net short position in the gold futures market by more than 21% while gold prices corrected from US$1,965 down to US$1,770.Commitments of Traders for Gold as of February 27th, 2021. Source: SentimentraderIn the long-term comparison, however, the current net short position is still extremely high and does actually signal a further need for correction. However, this situation has been ongoing since mid of 2019. Since then, commercial traders have not been able to push gold prices significantly lower to cover their massive short positions.We can assume that since the emergence of the “repro crisis” in the USA in late summer 2019, the massive manipulation via non-physical paper ounces no longer works as it did in the previous 40 years. The supply and demand shock caused by the Corona crisis in March 2020 has certainly exacerbated this situation. In this respect, COMEX has lost its mid- to long-term weight and influence on pricing. This doesn’t mean however, that short-term sell-offs like yesterday won’t happen anymore.Nevertheless, the CoT report on its own continues to deliver a clear sell signal, similar to the last one and a half years already.Sentiment: Gold – The Final Sell-Off Is Here!Sentiment Optix for Gold as of February 27th, 2021. Source: Sentiment traderThe weak price performance in recent weeks has caused an increasingly pessimistic mood among participants in the gold market. The Optix sentiment indicator for gold is now below its lows from November 30th. In a bull market, however, these rather pessimistic readings are rare and usually short-lived. In this respect, even the currently not extreme negative sentiment could well be sufficient for a sustainable ground and turnaround.Overall, the current sentiment analysis signals an increasingly optimistic opportunity for contrarian investors. The chances for a final low after seven months of correction are relatively good in the short term already.Seasonality: Gold – The Final Sell-Off Is Here!Seasonality for Gold as of February 22nd, 2021. Source: SeasonaxFrom a seasonal point of view, the development in the gold market in recent weeks is in stark contrast to the pattern established over the last 52 years. Thus, a strong start to the year could have been expected well into February. Instead, gold fell sharply from US$ 1.959 down to US$1.717 so far.If one pushes the statistically proven seasonal high point from the end of February to the beginning of January, a grinding sideways to lower phase including interim recoveries as well as recurring pullbacks is still to be expected until April. The beginning of the next sustainable uptrend could therefore theoretically be estimated approximately starting in May. Of course, these are all just abstract seasonal mind games.In any case, statistically speaking, the seasonality for gold in spring is not very supportive for about four months. In this respect, the seasonal component continues to call for patience. At the latest in early summer however, gold should be able to trend higher again. The best seasonal phase typically starts at the beginning of July and lasts until the beginning of October.Sound Money: Bitcoin/Gold-RatioSound Money Bitcoin/Gold-Ratio as of February 22nd, 2021. Source: ChaiaWith prices of US$47,500 for one Bitcoin and US$1,734 for one troy ounce of gold, the Bitcoin/Gold-ratio is currently sitting at 27.39. That means you have to pay more than 27 ounces of gold for one Bitcoin. In other words, an ounce of gold currently only costs 0.036 Bitcoin. Bitcoin has thus mercilessly outperformed gold in the past few months. We had repeatedly warned against this development since early summer 2020!© Holger Zschaepitz via Twitter @Schuldensuehner, February 17th, 2021Generally, you should be invested in both: precious metals and bitcoin. Buying and selling Bitcoin against gold only makes sense to the extent that one balances the allocation in these 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 at least 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 complement. 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 complementary unit of a true safe haven in the 21st century. You want to own both!”– Florian GrummesMacro update and conclusion: Gold – The Final Sell-Off Is Here!© Holger Zschaepitz via Twitter @Schuldensuehner, February 19th, 2021.In the big picture, the “confetti party” continues. As usual, the Fed’s balance sheet total rose to a new all-time high of US$7,557 billion. The increase in assets again concentrated almost entirely in the securities holdings. The Fed balance sheet total now corresponds to 35% of the US GDP.© Holger Zschaepitz via Twitter @Schuldensuehner, February 17th, 2021In the eurozone, the unprecedented currency creation continues as well. Here, the ECB’s balance sheet climbed to 7,079 billion EUR reaching a new all-time high. The ECB balance sheet now represents 71% of the euro-zone GDP.© Crescant Capital via Twitter ©Tavi Costa, February 12th, 2021.But the Chinese are doing it the most blatantly. Here, the money supply has increased by US$5.4 trillion since March 2020!© Crescant Capital via Twitter ©Tavi Costa, February 15th 2021.As repeatedly written at this point, the expansion of the central bank’s balance sheets has far-reaching consequences. The GSCI raw materials index has risen significantly in the past 11 months. Accordingly, inflation expectations are also rising more and more and still have a lot to catch up.© Crescant Capital via Twitter ©Tavi Costa, February 20th 2021.Wood prices in the USA provide a good example of the rapidly rising commodity prices. Lumber saw the fastest increase since 1974 and has risen by more than 35% since the beginning of the year. During the same period, gasoline increased by 20%, natural gas by 26%, agricultural raw materials are around 25% more expensive and base metals jumped over 20% higher! Hence, inflation is coming, and central bankers won’t be able to stop it.While silver and platinum have been anticipating this “trend” for weeks and have been holding up much better than gold, the precious metal sector is still in its correction phase. This correction began after a steep two-year rally in last August and can be classified as perfectly normal and healthy until now.© Holger Zschaepitz via Twitter @Schuldensuehner, February 18th, 2021.After seven months and a price drop of nearly US$360, the worst for gold is likely over. In view of the recent slight increase in real US yields (currently -0.92%) the pullback over the last few weeks can be justified. Yet, it is important to focus on the bigger picture. This is where the international devaluation race to the bottom continues unabated and will sooner or later lead to significantly higher gold prices too.Technically, Friday’s sell off might have marked the final low for this ongoing correction. As well, the slide could continue for a few more days, but the remaining risk to the downside seems rather shallow. In the worst-case Gold might drop to US$1,650 to US$1,680.To conclude, this means for Gold – The Final Sell-Off Is Here! The Bottom may arrive soon within the next week or has already been seen on Friday.Source: www.celticgold.euFeel 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 Florian Grummes|February 27th, 2021|Tags: Bitcoin, bitcoin/gold-ratio, Gold, Gold Analysis, Gold bullish, gold correction, Gold Cot-Report, gold fundamentals, Silver, The bottom is in|0 CommentsFlorian GrummesPrecious metal and crypto expertwww.midastouch-consulting.comFree newsletterSource: www.celticgold.euAbout the Author: Florian GrummesFlorian 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.
Stocks, Gold – Rebound or Dead Cat Bounce?

Stocks, Gold – Rebound or Dead Cat Bounce?

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

Worst for Stocks Over?

Finance Press Release Finance Press Release 01.03.2021 15:39
Is the worst of what the last few weeks brought over? February started off with so much promise, only to be ruined by surging bond yields.The way that bond yields have popped has weighed heavily on growth stocks. Outside of seeing a minor comeback on Friday (Feb. 26), the Nasdaq dropped almost 7% between February 12 and Friday’s (Feb. 26) close.Other indices didn’t fare much better either.The spike bond yields, however, in my view, are nothing more than a catalyst for stocks to cool off and an indicator of some medium to long-term concerns. But calling them a structural threat is a bit of an overstatement.Rising bond yields are a blessing and a curse. On the one hand, bond investors see the economy reopening and heating up. On the other hand, with the Fed expected to let the GDP heat up without hiking rates, inflation may return.I don’t care what Chairman Powell says about inflation targets this and that. He can’t expect to keep rates this low, buy bonds, permit money to be printed without a care, and have the economy not overheat.He may not have a choice but to hike rates sooner than expected. If not this year, then in 2022. I no longer buy all that talk about keeping rates at 0% through 2023. It just can’t happen if bond yields keep popping like this.So was the second half of February the start of the correction that I’ve been calling for? Or is this “downturn” already over?Time will tell. While I still do not foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of this month could happen.Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in almost a year.A correction could also be an excellent buying opportunity for what could be a great second half of the year.Pay attention to several things this week. The PMI composite, jobs data, and consumer credit levels will be announced this week.We have more earnings on tap this week too. Monday (March 1), we have Nio (NIO) and Zoom (ZM), Tuesday (March 2) we have Target (TGT) and Sea Limited (SE), Wednesday (March 3), we have Okta (OKTA) and Snowflake (SNOW), and Thursday (March 3) we haveBroadcom (AVGO).My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:The downturn we experienced to close out February could be the start of a short-term correction- or it may be a brief slowdown. A further downturn by the end of the month is very possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- a Buyable Slowdown?Figure 1- Nasdaq Composite Index $COMPThe Nasdaq’s downturn was so overdue. Even though more pain could be on the horizon, I like the Nasdaq at this level for some buying opportunities.If more losses come and the tech-heavy index dips below support at 13000, then it could be an even better buying opportunity. It can’t hurt to start nibbling now, though. If you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.Plus, if Cathie Wood, the guru of the ARK ETFs that have continuously outperformed, did a lot of buying the last two weeks, it’s safe to say she knows a thing or two about tech stocks and when to initiate positions. Bloomberg News ’ editor-in-chief emeritus Matthew A. Winkler wouldn’t have just named anyone the best stock picker of 2020.Before February 12, I would always discuss the Nasdaq’s RSI and recommend watching out if it exceeds 70.Now? As tracked by the Invesco QQQ ETF , the Nasdaq has plummeted almost 7% since February 12 and is closer to oversold than overbought. !While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony last week (even if I don’t totally buy into it). Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after its recent slowdown, I feel more confident in the Nasdaq as a SHORT-TERM BUY.The RSI is king for the Nasdaq . Its RSI is now around 40.I follow the RSI for the Nasdaq religiously because the index is merely trading in a precise pattern.In the past few months, when the Nasdaq has exceeded an overbought 70 RSI, it has consistently sold off.December 9- exceeded an RSI of 70 and briefly pulled back.January 4- exceeded a 70 RSI just before the new year and declined 1.47%.January 11- declined by 1.45% after exceeding a 70 RSI.Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.I like that the Nasdaq is almost at its support level of 13000, and especially that it’s below its 50-day moving average now.I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Gold Continues Declines on Bond Yield Jitters

Gold Continues Declines on Bond Yield Jitters

Finance Press Release Finance Press Release 02.03.2021 16:30
The economy seems to be recovering, while bond yields are increasing again, sending gold prices down.Not good. Gold bulls can be truly upset. The yellow metal continued its bearish trend last week. As the chart below shows, the price of gold has declined from $1,807 on Monday (Feb. 22) to $1,743 on Friday (Feb. 26).What happened? Well, last week was full of positive economic news. In particular, personal income surged by 10 percent in January, compared to only 0.6-percent rise in the previous month. Meanwhile, consumer spending increased 2.4 percent, following a 0.4-percent decline in December. This means that, on an absolute basis, personal consumption expenditures have almost returned to the pre- pandemic level, as the chart below shows.Additionally, durable goods orders jumped by 3.4 percent in January versus a 1.2-percent increase one month earlier. Moreover, initial jobless claims declined from 841,000 to 730,000 in the week ending February 20, as the chart below shows. It means that the economic situation is improving, partially thanks to the December fiscal stimulus.And, on Saturday (Feb. 27), the House of Representatives passed Biden’s $1.9 trillion stimulus package. Although the bill has yet to be approved by the Senate, the move by the House brings us one step closer to its implementation. Although the additional fiscal stimulus may overheat the economy and turn out to be positive for gold prices in the long-term, the strengthened prospects of higher government expenditures can revive the optimism in the financial markets, negatively affecting the safe-haven assets such as gold .Finally, on Saturday, the FDA authorized Johnson & Johnson’s vaccine against COVID-19. This decision expands the availability of vaccines, which brings us closer to the end of the epidemic in the U.S. and offers hope for a faster economic recovery. The new vaccine is highly effective (it provides 85-percent protection against severe COVID-19 28 days after vaccination) and most importantly, requires only one dose, which facilitates efficient distribution. So, the approval of another vaccine is rather bad news for gold and could add to the metal’s problems in the near future.However, the most important development from the last week was the jump in the bond yields . As the chart below shows, after a short stabilization in the first half of the week, the yields on the 10-year Treasuries indexed by inflation rose from -0.79 to -0.60 percent on Thursday (Feb. 25). This surge in the real interest rates is negative for the price of gold.Implications for GoldWhat does this all mean for the price of gold? Well, the increase in the bond yields is clearly bad for the yellow metal. Although they have partially risen to strengthened inflation expectations, the real interest rates have also soared. It means that investors expect wider fiscal deficits and expanding vaccination to accelerate inflation only partially, but in a large part, it will speed up real economic growth. This is a huge problem for gold, as real interest rates are a key driver of gold prices.An additional issue is that the expectations of higher economic growth and inflation create accompanying expectations for the Fed to tighten its monetary policy and hike the federal funds rate , which exerts downward pressure on gold prices.This is what we were afraid of at the beginning of the year. We noted that the real interest rates were so low that the next move could be up. Importantly, there is further room for upward trajectory, as the real interest rates are still importantly below the pre-pandemic level.However, we wouldn’t bet on the return to the levels seen last year. After all, interest rates didn’t return to the pre-crisis level after the Great Recession , so it’s unlikely that they will do it now. Additionally, investors should remember that the U.S. government is now so heavily indebted that if Treasury yields continue to increase, the Fed would have to intervene. A failure to do so would mean that the interest expenses would grow too much, creating serious problems for the Treasury. So, the current bearish trend in gold may not last forever – although it may still take some time.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
What Correction in Stocks? And Gold?

What Correction in Stocks? And Gold?

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

Mixed Start for Stocks in March

Finance Press Release Finance Press Release 03.03.2021 15:08
After March kicked off with a session that indicated the worst for stocks may be over (for now), Tuesday saw the indices sell-off towards the close.At least Rocket Mortgage (RKT) had a good day, though! And, at least the 10-year yield didn’t spike either. But that could change. Yields ticked up overnight to 1.433%, after President Biden pledged enough vaccine supply to inoculate every American adult by the end of May.So, where do we go from here? This positive economic and health news is excellent for reopening. But rising bond yields are a blessing and a curse. On the one hand, bond investors see the economy reopening and heating up. On the other hand, with the Fed expected to let the GDP scorch without hiking rates, inflation may return.I don’t care what Chairman Powell says about inflation targets this and that. The price of gas and food is increasing already. In fact, according to Bloomberg, food prices are soaring faster than inflation and incomes.For January, Consumer Price Index data also found that the cost of food eaten at home rose 3.7 percent from a year ago — more than double the 1.4 percent year-over-year increase in the prices of all goods included in the CPI.Can you imagine what this was like for February? Can you imagine what it will be like for March? I’m not trying to sound the alarm - but be very aware. These are just the early warning signs.So about March. Will it be more like Monday or Tuesday? Was the second half of February the start of the correction that I’ve been calling for? Or is the “downturn” already over? Only time will tell. While I still do not foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of this month could happen.Rising bond yields are concerning. Inflation signs are there. But structurally, I don’t think it will crash the market (yet).Corrections are also healthy and normal market behavior, and we are long overdue for one. It’s been almost a year now. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).A correction could also be an excellent buying opportunity for what could be a great second half of the year.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. A further downturn by the end of the month is very possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- a Buyable Slowdown?Figure 1- Nasdaq Composite Index $COMPThe Nasdaq’s slowdown has been long overdue. Even though more pain could be on the horizon, I like the Nasdaq at this level for some buying opportunities.But I’d prefer it drop below support at 13000 for real buying opportunities.But it can’t hurt to start nibbling now. If you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.Plus, it’s safe to say that Cathie Wood, the guru of the ARK ETFs, is the best growth stock picker of our generation. Bloomberg News ’ editor-in-chief emeritus Matthew A. Winkler seems to think so too. Her ETFs, which have continuously outperformed, focus on the most innovative and disruptive tech companies out there. Not to put a lot of stock in one person. But it’s safe to say she knows a thing or two about tech stocks and when to initiate positions- and she did a lot of buying the last few weeks.I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.Before February 12, I would always discuss the Nasdaq’s RSI and recommend watching out if it exceeds 70.Now? As tracked by the Invesco QQQ ETF , the Nasdaq has plummeted almost 5.5% since February 12 and is closer to oversold than overbought!But it’s still not enough.Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after its recent slowdown, I feel more confident in the Nasdaq as a SHORT-TERM BUY.The RSI is king for the Nasdaq . Its RSI is now around 45.I follow the RSI for the Nasdaq religiously because the index is merely trading in a precise pattern.In the past few months, when the Nasdaq has exceeded an overbought 70 RSI, it has consistently sold off.December 9- exceeded an RSI of 70 and briefly pulled back.January 4- exceeded a 70 RSI just before the new year and declined 1.47%.January 11- declined by 1.45% after exceeding a 70 RSI.Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.Again- if the index drops below 13000, and the RSI hits undeniably overbought levels, get on the train.But because we haven’t declined just enough, I am making this a SHORT-TERM BUY. But follow the RSI literally and take profits once you have the chance to.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Weak Jobs Data, Stocks and Gold

Weak Jobs Data, Stocks and Gold

Monica Kingsley Monica Kingsley 03.03.2021 16:19
Stocks gave up some of Monday‘s strong gains, but I find it little concerning in the sub-3,900 pre-breakout meandering. It‘s about time, and a play on the tech sector to participate meaningfully in the coming rally (or at least not to stand in the way again). Talking obstacles, what about today‘s non-farm employment change, before the really key Fri‘s release? A bad number makes it less likely for market participants to bet on the Fed raising rates soon – but frankly, I don‘t understand where this hawkish sentiment is coming from, now when we‘re not at even talking taper. Raising rates in the current shape of the recovery, where we have commodities and financial asset prices rising, and that‘s about it? No, the current economic recovery isn‘t strong enough to entertain that thought. The need for stimulus asap is obvious. Thus, prior trends in the commodities and currency arenas are likely to continue, and not even the current long-term Treasuries stabilization can prevent the greenback from falling more than temporarily.Just as I wrote yesterday about stocks:(…) All right, we‘re seeing a rebound in progress, on the way to new highs.Gold scored modest gains yesterday, but these aren‘t enough to flip its short-term outlook bullish. Yes, it‘s sitting within the strong support zone (with another one over $40 further lower), and it isn‘t breaking down. It could actually stage a rebound precisely off this support zone next, as sharp rallies are born during the opposite sentiment clearly prevailing, which is what we have in gold now.Silver remains relatively solid, and commodities aren‘t breaking down. We have a month historically strong for copper, and I talked both yesterday and Monday what that means for the copper to oil ratio – and its relationship to gold, given the very accomodative monetary policy without real end in sight. This is then checked against nominal rates matching up against inflation, inflation expectations.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsYesterday‘s downswing didn‘t attract much volume, making it a short-term hesitation That‘s the meandering, the search for direction just below the 3,900 mark that I had been tweeting about yesterday. If you look at the equal weighted S&P 500 chart (RSP ETF), it‘s clear that new highs are still a little off given the sectoral balance of power.The market breadth indicators reflect the daily indecisiveness fittingly. While not worrying in themselves, they‘re showing that Monday‘s session wasn‘t the beginning of an endless bullish streak. Rather, it‘s just a part of the bullish turn that would over time prevail more convincingly.Credit MarketsThe key leading credit market ratio – high yield corporate bonds to short-dated Treasuries (HYG:SHY) – is slightly leaning bullish here. And that‘s good given the talk of bubble bursting, significant correction just ahead (started) – that‘s what I am looking for in uncertain times. Ideally though, such a bond market leadership should last a bit longer than one day, to lend it more credibility.TechnologyTechnology (XLK ETF) once again reversed to the downside, or so the chart says. While high, the volume isn‘t trustworthy – it doesn‘t stand comparison to the visually similar early Sep pattern, which was followed by a break to new lows in the latter half of the month. Then, as the overlaid S&P 500 (black line) shows, high beta pockets and value sectors have assumed leadership, powering the S&P 500 advance.DollarThe USD index is keeping close to the 91 mark, and yesterday‘s candle reveals that the potential upside isn‘t probably all that great. This is consistent with the dollar being in a bear market, sliding to new lows in 2021 with likelihood bordering on certainty. Plain and simple, it‘ll be on the defensive regardless of where long-term rates go.Gold and SilverGold had a good chance to rebound higher throughout this week, but didn‘t – given its Monday‘s performance, I had some reservations even as the support zone held, and upswing could easily follow – especially given the positive copper to oil ratio‘s move, or TLT not putting fresh pressure. But that‘s not happening in today‘s pre-market session, as the support‘s lower border is being tested again.Silver keeps holding the $26 level, and still trades at the 50-day moving average. While it‘s lagging behind both platinum and copper, its chart is (unlike gold‘s) bullish. Remember, the most bullish thing prices can do, is to rise. Not to rebound and fizzle out, only to rebound and fizzle out again, the way we see in gold as it keeps offering both bearish and bullish signs.OilOil keeps trading in a bullish fashion, and the 3-day long correction hasn‘t broken even Feb local lows yet. While we‘re for increased volatility in here, the uptrend remains strong, and volume currently doesn‘t support a deep correction theory. Just look how little have the retreating daily indicators achieved when it comes to the underlying price move? That‘s a reflection of a strong uptrend, which would be however best advised to resume sooner rather than later so as not to lose the technical advantage.SummaryStock bulls are on a recovery path, and new all time highs are basically a question of when the tech would step up to the plate again. Despite today‘s premarket weakness reaching well below the 3,870 level, the S&P 500 internals and credit markets performance (including foreign bonds) doesn‘t indicate that much downside potential currently. This correction‘s shape is largely in, and I mean the price downside – patience though will be needed before seeing new highs.Gold remains stuck in its support zone, unable to rally, not breaking down. The copper advantage of yesterday is lost for today, but seeing it and silver recover would be the most likely outcome once the immediate threat of rising Treasury yields retreats more noticeably. Gold is far from out of the woods, and flirting with the support level without a convincing rebound, is dangerous to the bulls.
Gold Predictive Modeling Suggests A New Rally Targeting $2300+, But When Will it Start?

Gold Predictive Modeling Suggests A New Rally Targeting $2300+, But When Will it Start?

Chris Vermeulen Chris Vermeulen 04.03.2021 15:12
One of our readers' favorite tools is the Adaptive Dynamic Learning (ADL) predictive modeling system.  This tool maps out technical and price patterns into an array of similar setups using historical data, then applies that data to current and future price bars.  Using the ADL predictive Modeling tool, we can see into the future based on historical technical analysis that maps statistically relevant price activity and shows us the highest probability outcomes. Monthly ADL Gold PredictionsIn this research article, we're going to focus on Gold and how current price action suggests a bottom is likely near the $1720 level.  The YELLOW price channels on this Monthly Gold chart highlight exactly where we believe support is located for Gold.  If this $1700 price level is breached to the downside, then the previous lows, near $1400, are the next support level for Gold.Our ADL predictive modeling system suggests the $1720 support level will hold, prompting a new rally to levels above $2200 within 30 to 60+ days.  The ADL system predicts an aggressive move in Gold near May or June 2021.  The move higher may happen earlier than the ADL Monthly predictions indicate.  There is a chance that a move back above $1850 starts the move higher before the end of March or April 2021 – propelling Gold toward the $2300+ peak.  The actual peak level predicted by the ADL predictive modeling system is $2315.2-Week ADL Predicts Gold May Start To Rally near Mid-MarchThis 2-Week Gold Chart highlights a similar ADL price prediction.  What we find interesting about this ADL outcome is the similar price predictions originating from vastly different origination points.  The Monthly ADL prediction originates from a date of August 1, 2020 – the peak price bar.  This 2-Week ADL prediction originates from a date of November 23, 2020 – the intermediate low DOJI bar before the recent continue downward trend targeting the YELLOW price channel. Be sure to sign up for our free market trend analysis and signals now so you don’t miss our next special report!The similarities between these two unique ADL predictions suggest that Gold may attempt to find support fairly quickly near the $1700 to $1720 level, then attempt to move above $1795~1825 as an early stage rebound off the lower YELLOW price channel.  The 2-Week ADL price prediction suggests that Gold will quickly attempt to move higher, before or near March 20th, targeting levels above $1900.  Then, as you can see from the YELLOW DASH LINES on this chart, Gold will attempt to move moderately higher over the next 2 to 3+ months targeting levels above $2030.If these ADL price predictions are accurate and Gold does find a solid bottom near $1700, then we would want to watch for an upward price trend to start to setup near March 15th or so, attempting to push Gold prices above $1850 to $1900.  If that happens, then the next phase of the ADL price predictions would become even more relevant.  That means the upward price trend would attempt to target the $2050 level, then the $2300 level before June or July 2021.Our ADL predictive modeling system accurately called the rally in gold in 2019 and has delivered some incredible predictive analysis over the past few months.  You can read some of our earlier ADL predictions here:November 22, 2020: ADAPTING DYNAMIC LEARNING SHOWS POSSIBLE UPSIDE PRICE RALLY IN GOLD & SILVERAugust 4, 2020: REVISITING OUR SILVER AND GOLD PREDICTIONS – GET READY FOR HIGHER PRICESMarch 28, 2019: PRECIOUS METALS SETUP FINAL BUYING OPPORTUNITYMiner ETFs May See Big GainsIn terms of sector ETF trends, a stronger upside move in Gold would likely prompt Miner ETFs to also move dramatically higher over the next 30 to 60+ days.  This GDXJ Weekly chart highlights a Fibonacci 100% measured move higher which suggests the $73.91 and $91.71 levels could become our next upside targets. Additionally, one has to consider the process that would likely prompt Gold to move higher throughout this span of time.  A continued commodity rally could prompt some of this move to happen, but fear would also have to be factored into this move if Gold were to rally above $2300 as the ADL system predicts.  Any renewed fear would likely come from global financial or credit market concerns or be related to hyper-inflation concerns.  We'll have to see how things progress throughout the rest of 2021 to really get a better feel for what may be driving this upward price trend.We suggest traders pay very close attention to what happens in Gold over the next 2 to 4+ weeks.  If our ADL predictions are accurate, we could see some really big moves in the global markets, various sectors and metals/miners very quickly. If the markets start to roll over and volatility rises, we can benefit from it with our Options Trading Signals which we use non-direction trades to sell premiums. This allows options traders to profit from volatility and not worry about which way the market moves.Don’t miss the opportunities in the broad market sectors in 2021, which will be an incredible year for traders of the BAN strategy.  You can sign up now for my FREE webinar that teaches you how to find, enter, and profit from only those sectors that have the most strength and momentum. Staying ahead of sector trends is going to be key to success in volatile markets. For those who believe in the power of trading on 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 with daily market reports, research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my premium subscribers.
Are S&P 500 and Precious Metals Bears Just Getting Started?

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

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

Gold Approaches $1,700 on Rising Economic Confidence

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

Silver, don’t be fooled

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

Correction for Nasdaq- More Indices to Follow?

Finance Press Release Finance Press Release 05.03.2021 15:31
I called Jay Powell's bluff a week ago. Remember when he said last week that we're still far from The Fed's inflation targets?Well, I was right to doubt him. The market didn't like his change in tone Thursday (Mar. 5).You see, when bond yields are rising as fast as they have, and Powell is maintaining that Fed policy won't change while admitting that inflation may " return temporarily ," how are investors supposed to react? On the surface, this may not sound like a big deal. But there are six things to consider here:It's a significant backtrack from saying that inflation isn't a concern. By admitting that inflation "could" return temporarily, that's giving credence to the fact that it's inevitable.The Fed can't expect to let the GDP scorch without hiking rates. If inflation "temporarily returns," who is to say that rates won't hike sooner than anyone imagines?Fool me once, shame on me, fool me twice...you know the rest. If Powell changed his tune now about inflation, what will he do a few weeks or months from now when it really becomes an issue?Does Jay Powell know what he's doing, and does he have control of the bond market?A reopening economy is a blessing and a curse. It's a blessing for value plays and cyclicals that were crushed during COVID and a curse for high-flying tech names who benefitted from "stay-at-home" and low-interest rates.The Senate will be debating President Biden’s $1.9 trillion stimulus plan. If this passes, as I assume it will, could it actually be worse for the economy than better? Could markets sell-off rather than surge? Once this passes, inflation is all but a formality.Look, it's not the fact that bond yields are rising that are freaking out investors. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. But it's the speed at which they've risen that are terrifying people.According to Bloomberg , the price of gas and food already appear to be getting a head start on inflation. For January, Consumer Price Index data also found that the cost of food eaten at home rose 3.7 percent from a year ago — more than double the 1.4 percent year-over-year increase in all goods included in the CPI.The month of January. Can you imagine what this was like for February? Can you imagine what it will be like for March?I'm not trying to sound the alarm- but be very aware. These are just the early warning signs.So, where do we go from here? Time will tell. While I still do not foresee a crash like we saw last March and feel that the wheels remain in motion for a healthy 2021, that correction that I've been calling for has already started for the Nasdaq. Other indices could potentially follow.Finally.Corrections are healthy and normal market behavior, and we have been long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).Most importantly, this correction could be an excellent buying opportunity.It can be a very tricky time for investors right now. But never, ever, trade with emotion. Buy low, sell high, and be a little bit contrarian. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself. Be careful, but be a little bold right now too.There's always a bull market somewhere, and valuations, while still somewhat frothy, are at much more buyable levels now.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. A further downturn by the end of the month is very possible, but I don't think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- From Overbought to Oversold in 3 Weeks?Figure 1- Nasdaq Composite Index $COMPThe Nasdaq is finally in correction territory! I have been waiting for this. It’s been long overdue and valuations, while still frothy, are much more buyable. While more pain could be on the horizon until we get some clarity on this bond market and inflation, its drop below 13000 is certainly buyable.The Nasdaq has also given up its gains for 2021, its RSI is nearly oversold at about 35, and we’re almost at a 2-month low.It can’t hurt to start nibbling now. There could be some more short-term pain, but if you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.Plus, it’s safe to say that Cathie Wood, the guru of the ARK ETFs, is the best growth stock picker of our generation. Bloomberg News ’ editor-in-chief emeritus Matthew A. Winkler seems to think so too. Her ETFs, which have continuously outperformed, focus on the most innovative and disruptive tech companies out there. Not to put a lot of stock in one person. But it’s safe to say she knows a thing or two about tech stocks and when to initiate positions- and she did a lot of buying the last few weeks.I think the key here is to “selectively buy.” I remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.I also think it’s an outstanding buying opportunity for big tech companies with proven businesses and solid balance sheets. Take Apple (AAPL), for example. It’s about 30% off its all-time highs. That is what I call discount shopping.What’s also crazy is the Nasdaq went from overbought 3 weeks ago to nearly oversold this week. The Nasdaq has been trading in a clear RSI-based pattern, and we’re at a very buyable level right now.I like the levels we’re at, and despite the possibility of more losses in the short-run, it’s a good time to start to BUY. But just be mindful of the RSI, and don’t buy risky assets. Find emerging tech sectors or high-quality companies trading at a discount.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Great ADP Figures But Things Can Still Turn Nasty

Great ADP Figures But Things Can Still Turn Nasty

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

No More Rocking the Boat in Stocks But Gold?

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

Is the Pain Over?

Finance Press Release Finance Press Release 08.03.2021 15:37
The theme of last week was primarily the same as the previous few weeks- rising bond yields and inflation fears caused stocks to crumble.Look, it's not the fact that bond yields are rising that are freaking out investors. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. But it's the speed at which they've risen that are terrifying people. So far this year, the 10-year yield has soared 72%Fed Chair Jay Powell's statement that inflation could "temporarily return" did not help matters much last week either. However, despite the fears, the indices really did not perform all that badly the previous week after a Friday (Mar. 5) reversal. The Dow Jones managed to gain 1.8%, the S&P eked out a 0.8% gain, and after briefly touching correction territory and giving up its gains for the year, the Nasdaq managed to decline only -2.1%.So what's on tap for this week? Is the downturn overblown and already over?This is a massive week for market sentiment. The Senate, first and foremost, passed President Biden's $1.9 trillion stimulus plan over the weekend. On the one hand, stocks could pop from this. On the other hand, this makes inflation a foregone conclusion. Remember this, too- when the market gets what it expects, it's usually a sell signal rather than a buy signal. Markets look forward. Not to the past, and not to the present.Important data being released this week also includes inflation data, initial claims, and consumer sentiment.Time will tell where we go from here. While I still do not foresee a crash like we saw last March and feel that the wheels remain in motion for a healthy 2021, inflation is a genuine concern and could be here already.According to Bloomberg , the price of gas and food already appear to be getting a head start on inflation. For January, Consumer Price Index data also found that the cost of food eaten at home rose 3.7 percent from a year ago — more than double the 1.4 percent year-over-year increase in all goods included in the CPI.This could only be the start too. In its 2021 outlook report, the Economic Research Service for the U.S. Department of Agriculture forecast the food cost from grocery stores to rise 1 to 2% this year.Moody's Analytics chief economist Mark Zandi also believes that Wall Street is significantly underestimating inflation's seriousness and warns it could affect every sector in the market — from growth to cyclicals."Inflationary pressures will develop very quickly," he said. "I don't think there's any shelter here."I'm not trying to sound the alarm- but be very aware. These are just the early warning signs.I still feel that a correction of some sort is imminent. The Nasdaq touched it briefly last week and is still about 2% away from one. Other indices could possibly follow. But don't fret. Corrections are healthy and normal market behavior, and we have been long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).Most importantly, this correction could be an excellent buying opportunity.It can be a very tricky time for investors right now. But never, ever, trade with emotion. Buy low, sell high, and be a little bit contrarian. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself. Be cautious, but be a little bold too.There's always a bull market somewhere, and valuations, while still somewhat frothy, are at much more buyable levels now.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. A further downturn by the end of the month is very possible, but I don't think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- Buyable but Beware of the RisksFigure 1- Nasdaq Composite Index $COMPThe Nasdaq is no longer in correction territory, nor is it negative for 2021 any longer. But beware- this could change very quickly. More pain could be on the horizon until we get some clarity on this bond market and inflation. However, this Nasdaq downturn is long overdue and starting to be buyable.If you bought at the bottom on Friday before the afternoon reversal and made some quick gains, good on you. It actually didn’t end up being THAT bad of a week for the Nasdaq after Friday’s (Mar. 5) reversal.Be that as it may, Friday’s (Mar. 5) reversal does not mean we’re out of the woods. According to Morgan Stanley’s chief U.S. equity strategist Mike Wilson , “10-year yields finally caught up to other asset markets. This is putting pressure on valuations, especially for the most expensive stocks that had reached nosebleed valuations.”Expensive stocks? Nosebleed valuations? Sounds like tech to me.Wilson also said that once valuation correction and repositioning are finished, then growth stocks can potentially “rejoin the party.”The Nasdaq is now mostly flat for the year, its RSI is closer to oversold than overbought, and we’re at almost a 2-month low.It can’t hurt to start nibbling now. There could be some more short-term pain, but if you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.I think the key here is to “selectively buy.” I remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.I also think it’s an outstanding buying opportunity for big tech companies with proven businesses and solid balance sheets. Take Apple (AAPL), for example. It’s about 15% off its January 26th highs. That is what I call discount shopping.I like the levels we’re at, and despite the possibility of more losses in the short-run, it’s a good time to start to BUY. But just be mindful of the RSI, and don’t buy risky assets. Find emerging tech sectors or high-quality companies trading at a discount.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as when small-caps will be buyable, more thoughts on inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
How to Join the Mining Party… Before it Ends

How to Join the Mining Party… Before it Ends

Finance Press Release Finance Press Release 08.03.2021 18:39
Forget gold and silver for a moment. Do you hear the music? Yes, it’s coming from the mining ETFs club. But how long will the party last?And more importantly, why miners, you may ask? Because miners tend to outperform in the early days of a major rally.After closing only $0.10 below my initial downside target of $31 on Mar. 1 , the GDX ETF could be ripe for an upward revision. Able to ignore much of last week’s chaos, the GDX ETF’s outperformance of gold and silver signals that the tide has likely turned.Please see below:Figure 1To that point, I warned on Mar. 1 that help was on the way:The GDX ETF has garnered historical support at roughly $29.52. The level also coincides with the early-March high, the mid-April low and the 61.8% Fibonacci retracement level. As a result, a corrective upswing to ~$33/$34 could be the miners’ next move.Furthermore, after alerting subscribers on Mar. 4 – writing that when gold moves to $1,692, we’ll automatically open long positions in the miners – the GDX ETF ended Friday’s (Mar. 5) session up by 3.2% from my initial entry of ~$30.80 - $31. Thus, from here, the GDX ETF has roughly 3.8% to 7.0% upside (as of Friday’s close) before the $33/$34 levels signals that the momentum has run its course.For now, though, positioning for more upside offers a solid risk-reward proposition . Prior to the initial decline, miners were weak relative to gold . However, after outperforming on Mar. 5, their steady hand was a sign of short-term strength. If you analyze the chart below, you can see that the size and shape of the current price action actually mirrors what we witnessed back in April.Please see below:Figure 2 - VanEck Vectors Gold Miners ETF (GDX), GDX and Slow Stochastic Oscillator Chart Comparison – 2020For context, I wrote on Mar. 5:Miners stopped their decline practically right in my target area, which I based on the 50% Fibonacci retracement and the 2020 highs and lows. Moreover, the proximity of the $31 level corresponds to the 2019 high and the 2016 high. Since so many support levels coincide at the same price (approximately), the latter is likely to be a very strong support. Moreover, the RSI was just close to 30, which corresponded to short-term buying opportunities quite a few times in the past.In addition, a short-term upswing could provide a potential pathway to $35 – as this level also corresponds with the GDX ETF’s late-February high, its monthly declining resistance line and its 50-day moving average. The abundance of resistance levels – combined with the fact that an upswing would further verify the GDX ETF’s breakdown below the neckline of its potential head and shoulders pattern – should keep the upward momentum in check.Over the medium-term, the potential head and shoulders pattern – marked by the shaded green boxes above – also deserves plenty of attention.For context, I wrote previously:Ever since the mid-September breakdown below the 50-day moving average , the GDX ETF was unable to trigger a substantial and lasting move above this MA. The times when the GDX was able to move above it were also the times when the biggest short-term declines started.(…)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.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.As I explained previously, based on the similarities to the 1929 and 2008 declines, it could be the case that the precious metals sector declines for about 3 months after the general stock market tops. And it seems that we won’t have to wait long for the latter. In fact, the next big move lower in stocks might already be underway, as the mid-Feb. 2021 top could have been the final medium-term top.In conclusion, the gold miners should continue to glisten as oversold conditions buoy them back to the $33-$35 range. Due to the GDX ETF’s recent strength, combined with gold rallying off of the lows on Mar. 5, the PMs could enjoy a profitable one-week (or so) party. However, with the celebration likely to be short-lived, it’s important to keep things in perspective. While this week’s performance may elicit superficial confidence, medium-term clouds have already formed. As a result, positioning for an extended rally offers more risk than reward.(We normally include the "Letters to the Editor" section in the full version of Gold & Silver Trading Alerts only, but today I decided to include it also in this free version of the full (about 10x bigger than what you just read) analysis, so that you get the idea of how this part of the analysis looks like. It might be quite informative too. Enjoy:)Letters to the EditorQ: Could you update your thoughts regarding physical [gold and silver] for those looking to acquire additional positions - specifically, what do you think premiums and availability are going to look like when/if spot goes a $100 or $200 down from here? By way of example, I bought some U.S. gold buffaloes at $1854 spot at $1954. Those same coins at $1710 spot are still around $1930, if there are any to be found.A: It’s a tough call, because the premium values don’t follow the technical patterns. Still, based on the analogy to situations that seem similar to what we saw recently, it seems that we can indeed say something about the likely physical values close to the likely $1,450 bottom.Figure 43 - Source: didthesystemcollapse.orgThe above chart shows the eBay premium for 1 oz Gold American Eagle coins over the spot gold price.In April 2020, the premium spiked at about 14%. It was likely even higher in March (we don’t have the direct data), but the volatility back then was bigger than it is right now, so it seems that the current premium and the April 2020 premium values are a better proxy for the future bottoming premiums than the March 2020 bottom premium would be. If the volatility increases, one could see the premium at about 15% or so.With gold at about $1,450, the above-mentioned information means Gold American Eagle coins can cost about $1,670.Still, since gold futures prices seem more predictable than the prices of bullion coins, I’d focus on the former even while timing the purchase of the latter.Moreover, please note that I’m planning to focus on buying mining stocks close to the bottom and move to metals only later. The reason is that miners tend to outperform in the early days of a major rally (just like they did in the first quarter of 2016). The fact that the premium is likely to be high when gold bottoms in a volatile manner is yet another reason for the above. When switching from mining stocks to physical holdings several weeks or months later, one might be buying at a smaller premium over the spot, and also after having gained more on miners than on the metals. Of course, the above is just my opinion, and you can purchase whatever you want – after all, it’s your capital and your investment decisions.Q: Please note that I am glad to see gold moving downwards but I am a little confused – the trading report I just received recommends selling at 1690ish but the mailing previously said 1450ish - please see attached.Could you please investigate and advise.A: If anything in the Gold & Silver Trading Alerts seems confusing, please refer to the “Summary”, the trading/investment positions, and the “Overview of the Upcoming Part of the Decline” sections for clarification. In this case, we exited the remaining short positions when gold hit $1,693 and almost immediately entered long ones (when gold hit $1,692). We now have long positions in the mining stocks with the plan to exit them in a week or so, and re-enter short positions then, because the next big move is likely to be to the downside (perhaps as low as $1,450 or so). Also, the above is just my opinion, not a recommendation or investment advice.Q: Hi P.R., thanks for the advice on this trend, it’s been an amazing trade.As I’m trading on XAUUSD, are you also able to advise the targets for a gold long entry,or should I wait for the final bottom before opening any longs?A: I’m very happy that you’re making profits thanks to my analyses. While I think that the very short-term (for the next 5 trading days or so) outlook for gold, silver and mining stocks is bullish, I think the targets are more predictable for mining stocks than they are for gold and – especially – silver. Still, this time, the short-term upside target for gold is also relatively clear – at about $1,770. That’s why I put the $1,758 in the “For-your-information target” for gold in the “Summary” section below.Q: Are we looking for the short-term upside move to be 1-5 weeks before the final decline into the 1350-1500 zone? I'm a little unsure of the timing you're laying out.A: I’m looking for the short-term upswing to take place between 1 and 3 weeks – that’s the part of the “Overview of the Upcoming Part of the Decline” section about it:It seems to me that the initial bottom has either just formed or is about to form with gold falling to roughly $1,670 - $1,680, likely this week.I expect the rebound to take place during the next 1-3 weeks.After the rebound (perhaps to $33 - $34 in the GDX), I plan to get back in with the short position in the mining stocks.In my opinion it’s most likely that this counter-trend rally will take about 1 – 1.5 weeks. Then, I think that the decline to about $1,450 in gold will start.Q: Thank you for sending out the Alert # 2 with the new changes in the Gold and Silver trades today. This is necessary, so please send out the alert once you enter back to the short positions, please.A: I’m happy that you enjoyed this intraday Alert. I will indeed send you – my subscribers – an intraday confirmation that the long positions were closed and when we enter new short positions. Still, please note that we already have binding profit-take exit prices in place, which means that when prices move to the target levels (e.g., GDX to $33.92), the long positions should be automatically closed, and profits should be taken off the table – even without an additional confirmation from me (it takes time for me to write and send the message and then some time usually passes before one is able to act on my message).Q: You have informed us to make the move when the Gold price “REACHES” $1693.00. My question is; Does the word “Reach” mean when the price touches that point, if only for a moment, or does “Reach” mean when it closes the day at or below $1693.00?Thank you for your response to this question.A: “Reaching” a price means the same thing as “touching” the price or “moving to” the price. This means moving to this price level on an intraday basis – even for just one tick . If I mean closing prices, I will specifically describe them as such.For instance, I currently have binding exit positions for the current long position in the mining stocks – and these are exactly the price levels that I have put in my brokerage account as a limit sell order.Q: Please comment on the Hindenburg Omen for stocks:Figure 44 - Source: RefinitivA: Thanks. The Hindenburg omen is not one of the most reliable indicators - even on the above chart, it’s clear that most of the signals were not followed by declines. Please note how many fake initial signals there were before stocks finally declined in 2019 or 2020. There are many other reasons to think that stocks are going to move much lower, though. In the very short-term they could still move higher, but this move could be fake and could turn out to be the right shoulder of the head-and-shoulders top formation.Q: 1) for shorter-term trades such as the potential 10% pop in the GDX, is NUGT better?2) the plan after we re-enter a short trade when the GDX gets to $33/$34 might mean a longer haul before we hit rock bottom . You have mentioned time-scales up to 20 weeks (ish). Due to a longer holding period , would the CFD route be a cheaper route when compared to NUGT? I’m asking in general terms because each provider imposes different fees and I don’t expect you to comment on the fees charged by IG, which is the service I use.I also recognize that NUGT only offers 2 X leverage, whereas CFD’s offer up to five times leverage.Finally, the manner in which you detail the rich tapestry of the economic forces that impact PMs is revealing and educational. I find this all fascinating.I have my own views which can be summed up like this: How many inflationary false-dawns and panics has the bond market had? Ever since 2008, when the FED launched QE, there have been numerous bouts and hissy fits of inflationary expectations that have subsequently sunk like a dodgy soufflé. I think this time is no different and it’s entirely possible the 30-year bond could drop to ZERO. I am in the deflationary camp.How might the 10 year at zero or possibly sub-zero and longer, out on the duration curve to (TLT ETF) dropping to 0.5%, affect the price of gold?Your thoughts as ever, are much appreciatedA: 1) That depends on whether one seeks leverage or not, and how much thereof. Please note that some short-term trades could sometimes become medium-term trades if the market decides to consolidate or move in the other direction before continuing the predicted trend. In this case, non-leveraged instruments are at an advantage over the leveraged ones, because they don’t suffer from the back-and-forth trading as much as the leveraged ones do.If one’s desired exposure to the GDX ETF wouldn’t exceed the cash that one dedicated to trading, then in order to have the same exposure one would simply have half of the capital employed in NUGT (which is 2x leveraged). This way, the exposure would be identical, but the NUGT would imply additional risk of losing more capital if the trade takes much longer than planned and/or if the price moves adversely first.Please note that there is also an additional way to gain leverage (it’s not available for everyone, though) and that is through the use of margin on one’s brokerage account. I’d prefer to use margin for the GDX before aiming to gain leverage through NUGT.In other words, I’d first use more cash for GDX before I’d go into NUGT. If I wanted to have even bigger exposure than the one achieved by employing more capital to GDX, I would then consider using margin, and then I would consider using NUGT if I still wanted to get more leverage.There might be some traders who would seek to combine both for even bigger leverage (buying NUGT on margin), but this is definitely not something that I’d recommend to most people. In fact, it seems that in many cases, sticking to the GDX would be a good way to go.2) I think I already replied to the first part of your question (NUGT vs. CFD) above. Also, for other people reading this reply – please note that CFDs (contracts for difference) are not available in many areas, including the USA and Canada.I’m glad to read that you enjoy reading my explanations of the current situation in the markets (precisely, my opinions on it).Real interest rates are one of the most important drivers for gold (along with the USD Index), so a drop in the 10-year rates to zero or sub-zero levels would likely be very beneficial for the gold prices.Figure 45Also, based on the pace at which the rates have rallied recently, they might be topping here, but… There was no decline in the previous 40 years that was as big as what we saw between 2018 and 2020. Consequently, the corrective upswing might be bigger as well. Also, the above chart is not necessarily the scale that is big enough to make very long-term conclusions.Figure 46Over the past centuries, whenever the rates fell very low, they then rallied back up with vengeance. After WW2, it theoretically would have been a “good idea” to keep stimulating the economy with low rates – and yet, they soared. Right now, the monetary authorities strive to be very dovish and keep pumping liquidity into the system, and yet the rates are rallying anyway.So, while the analogy to the previous years – or the past few decades – suggests that the rally in the rates might be over or close to being over, the very long-term chart suggests otherwise.To make the situation even more complicated, if the stock market has already topped in February, and we have already entered the Kondratiev winter cycle, it means that we can theoretically expect the rates to fall, then rise in a credit crunch, and then fall much lower.All in all, the outlook for the interest rates is anything but simple and clear. Perhaps what we see right now already IS the credit crunch and the 10-year rates are on their way to above 2% - after all, they used to return above their 200-day moving average after the previous medium-term declines. It seems to me that the move above 2% in the 10-year rates could correspond with gold’s decline below $1,500.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 Drops below $1,700, while Senate Passes Biden’s Plan

Gold Drops below $1,700, while Senate Passes Biden’s Plan

Finance Press Release Finance Press Release 09.03.2021 14:14
Gold remains inert to President Biden’s large and hazardous economic plan, and ended up dropping below $1,700.President Joe Biden’s $1.9 trillion COVID-19 stimulus is coming! On Saturday, the U.S. Senate passed the American Rescue Plan on a party-line 50-49 vote. This means that after the House’s vote on Tuesday, Biden could sign the bill into law soon, and those $1,400 payments to most Americans could start to go out as soon as this month.The final bill includes not only $400 billion in checks of $1,400 to most Americans, but also $300 a week in extended unemployment benefits, and $350 billion in aid to state and local governments.The American Rescue Plan would be one of the largest stimulus packages in U.S. history. It would also be one of the most frivolous and superfluous economic programs. There is simply no need for such a large plan. Please take a look at the chart below.As one can see, U.S. personal income has increased during the pandemic, not decreased. Once again, people are now receiving higher income than one year ago. So, Biden’s stimulus with another round of $1,400 checks is not economically or socially justified.Indeed, the U.S. economy is already recovering. On Friday (Mar. 5), we got surprisingly good data about the American labor market , that showed the economy added 379,000 jobs in February, much above expectations. Meanwhile, the unemployment rate has slightly decreased further, as one can see in the chart below. Employment is still down by 9.5 million, or 6.2 percent, from the pre-pandemic level seen one year ago, but additional unemployment benefits or plain checks will not help bring people back into employment – in fact, the effect may turn out to be the reverse.Hence, Biden’s fiscal stimulus will bring little benefit to the economy, while significantly expanding the federal debt and risking overheating the economy. Indeed, the plan is estimated to increase the already high public debt (see the chart below) by an additional ten percentage points as a share of GDP .Implications for GoldWhat does this all mean for gold prices? From the fundamental point of view, Biden’s plan should be positive for the yellow metal. This is because it can increase inflation in the long-run, if people finally decide to spend all the money they got from Uncle Sam. It will not happen in the immediate future, as households will initially save the received payments, and some of them will repay their debts, but they are likely to spend more this year, to compensate for curbed consumption in 2020.However, whether Biden’s plan turns out inflationary or not, it will expand the already mammoth public debt. It should weaken the position of the greenback and increase the odds for a debt crisis or paying out this debt through inflation or financial repression. The higher the debt, the more difficult it will be for the Fed to normalize interest rates (welcome to the debt trap , my friends). All these factors should support gold prices in the long run.However, gold remains deaf to Biden’s disharmonious symphony. Indeed, as the chart below shows, the yellow metal has declined below the important level of $1,700 last week. It seems that the fiscal stimulus (together with the rollout of vaccinations and the economic recovery) has so far strengthened the risk appetite among investors who don’t focus on long-term consequences of the fiscal stimulus.This may change one day, but the sentiment in the gold market is clearly negative right now, and the fundamentals are more positive. The fundamentals may come to the fore in the end. However, gold may struggle further, especially if real interest rates go up again.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
Is Gold Now Replaying 2010-2012?

Is Gold Now Replaying 2010-2012?

Finance Press Release Finance Press Release 09.03.2021 14:57
The 2019-2021 gold chart is disturbingly similar to that of 2010-2012, but it does not have to be the harbinger of a bear market.Many ancient cultures saw history as cyclical. According to this view, society passes through repeated cycles. Can this apply to gold as well? I’m not referring here to the simple fact that we have both bull and bear markets in the precious metals – I refer here to the observation that gold’s price pattern seen in 2019-2021 mirrors that of 2010-2012 . Please take a look at the chart below.As you can see, in both periods, gold was steadily rising to a peak in the third quarter of the second year. A decade ago, the yellow metal gained 29 percent in 2010 and 74 percent as it hit the top. Then, it declined 19 percent by the end of 2011. Fast forward to more recent times. Gold gained 18.4 percent in 2019 and 62 percent at the peak. Afterwards, it declined 9 percent by the end of 2020.So, although the magnitude has now been weaker than in the aftermath of the Great Recession , the pattern is quite similar. The next chart – which presents the normalized gold prices in both periods to indices (when the starting point equals 100) – nicely illustrates how gold in 2019-2021 closely resembles gold from 2010-2012.This similarity may be disturbing. Should the pattern hold, then gold could go down significantly and stay in a sideways trend for years. As a reminder, this is what happened a decade ago. Gold bulls fought until the end of 2012, when they gave up and the yellow metal entered a full bear market, plunging 45 percent from the top to the bottom in December 2015. Then, it stayed generally flat till the end of 2018. If this cycle replays, we could see the price of gold go below $1,200 by the end of 2024.To be clear, there are some arguments to support the bearish case . Just as in the 2010s, the world is recovering now from the global economic crisis . The recession is over and the prospects are only better. Perhaps they’re not rosy, but they’re certainly better than many previously expected, which is what matters for the financial markets. As the worst is behind us, the risk appetite is returning, which could put gold and other safe-haven assets into oblivion. Actually, some could even argue that gold may now plunge even earlier, as a decade ago it was supported by the European sovereign debt crisis , which peaked in 2011-2012.However, there are also important reasons why gold could break the pattern and diverge from the 2010-2012 trend. First, we now have a much more dovish Fed . The U.S. central bank slashed the federal funds rate much quicker and expanded its balance sheet more decisively. Additionally, to avoid a taper tantrum caused by its announcement about tapering asset purchases, this time the Fed will normalize its monetary policy in a very, very gradual way, if at all. It means that interest rates will stay lower for longer. Lastly, the U.S. central bank changed its monetary policy framework, i.e., it prioritized the labor market over price stability and became more tolerant to higher inflation .Second, we also have a much easier fiscal policy . Even before the global pandemic , Trump significantly expanded budget deficits , but the Great Lockdown made them even larger. As pundits believe that the fiscal response in the aftermath of the global financial crisis of 2007-2009 was too small, they now want to go big – indeed, Biden’s $1.9 trillion economic plan is waiting to be passed by Congress.Third, this recovery might be more inflationary than a decade ago . This is because not only did the monetary base increase, but the broad money supply did as well. Last time, the Fed injected a lot of liquidity to the banking sector to bailout the banks. Now, the money has flowed much more through Main Street and the household sector, which could turn out to be more inflationary when all this money will be spent on goods and services. Also, last time we observed some deleveraging in the private sector, while now the supply of loans is continuously increasing at a positive rate. We are also already observing reflation in the form of a commodity boom, so gold may follow suit.To sum up, the patterns seen in the gold market in 2010-2012 and 2019-2021 are remarkably similar. So, the recent gold’s weakness may be really disturbing. However, this resemblance does not have to be a harbinger of further problems coming for gold bulls . After all, as Mark Twain is reputed to have said, “history doesn’t repeat itself, but it often rhymes”. Indeed, the macroeconomic and political environment is now clearly different than a decade ago – it’s more fundamentally positive for the price of gold.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
Stocks Shaking Off Weak Tech As Gold Bottoms?

Stocks Shaking Off Weak Tech As Gold Bottoms?

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

That’s Why You Buy the Dips

Finance Press Release Finance Press Release 10.03.2021 14:41
Days like Tuesday (Mar. 9) are why you buy the dips. It was nothing short of a reverse rotation from what we’ve seen as of late. Bond yields moved lower; tech stocks popped.That’s why I called BUY on the Nasdaq.Inflation fears and the acceleration of bond yields are still a concern. But it looks as if things are stabilizing, at least for one day. The lesson here, though, is to be bold, a little contrarian, and block out the noise.Unless you’ve been living under a rock, you know that recent sessions have been characterized by accelerating bond yields driving a rotation out of high growth tech stocks into value and cyclical stocks that would benefit the most from an economic recovery. The Nasdaq touched correction territory twice in the last week and gave up its gains for the year.But imagine if you bought the dip as I recommended.The Nasdaq on Tuesday (Mar. 9) popped 3.7% for its best day since November. Cathie Wood’s Ark Innovation ETF (ARKK) surged more than 10% for its best day ever after tanking by over 30%. Semiconductors also rallied 6%.Other tech/growth names had themselves a day too: Tesla (TSLA) +20%, Nvidia (NVDA) +8%, Adobe (ADBE) +4.3%, Amazon +3.8%, Apple (AAPL) +4.1%, and Facebook (FB) +4.1%.In keeping with the theme of buying the dip, do you also know what happened a year ago yesterday to the date? The Dow tanked 7.8%!There’s no way to time the market correctly. If you bought the Dow mirroring SPDR DJIA ETF (DIA) last March 9, you’d have still seen two weeks of pain until the bottom. However, you’d have also seen a gain of almost 36% if you bought that dip and held on until now.Look, I get there are concerns and fears right now. The speed at which bond yields have risen is concerning, and the fact that another $1.9 trillion is about to be pumped into a reopening economy makes inflation a foregone conclusion. But let’s have a little perspective here.Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%.So is the downturn overblown and already finished?Time will tell. I think that we could still see some volatile movements over the next few weeks as bond yields stabilize and the market figures itself out. While I maintain that I do not foresee a crash like what we saw last March and feel that the wheels remain in motion for an excellent 2021, Mr. Market has to figure itself out.A correction of some sort is still very possible. I mean, the Nasdaq’s already hit correction territory twice in the last week and is still about 3-4% away from returning to one. But don’t fret. Corrections are healthy and normal market behavior. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).Most importantly, a correction right now would be an excellent buying opportunity. Just look at the Nasdaq Tuesday (Mar. 9).It can be a very tricky time for investors right now. But never, ever, trade with emotion. Buy low, sell high, and be a little bit contrarian. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself. Be cautious, but be a little bold too.You can never time the market.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- That’s Why I Called BUYFigure 1- Nasdaq Composite Index $COMPFor the second time in a week, the Nasdaq hit correction territory and rocketed out of it. It saw its best day since November and proved once again that with the Nasdaq, you always follow the RSI. There could be more uncertainty over the next few weeks as both the bond market and equity market figure themselves out. However, the Nasdaq declines were very buyable, as I predicted.If you bought the dip before Tuesday’s (Mar. 9) session, good on you. Be a little bit bold and fearless right now. Take Ark Funds guru Cathie Wood, for example. Many old school investors scoffed at her comments on Monday (Mar. 8) after she practically doubled down on her bullishness for her funds and the market as a whole. After crushing 2020, her Ark Innovation Fund (ARKK) tanked over 30%. Many called her the face of a bubble. Many laughed at her.Tuesday, March 9, ARKK saw its best day in history.I’m not saying that we’re out of the woods with tech. All I’m saying is don’t try to time the market, don’t get scared and have perspective.The Nasdaq is once again roughly flat for the year, its RSI is closer to oversold than overbought, and we’re still below the 50-day moving average, near a 2-month low, and right around support at 13000.It can’t hurt to start nibbling now. There could be some more short-term pain, but if you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.I think the key here is to “selectively buy.” I remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.Mike Wilson , chief investment officer at Morgan Stanley, had this to say about recent tech slides- “I don’t think this is the end of the bull market or the end of tech stocks per se, but it was an adjustment that was very necessary.”I like the levels we’re at, and despite the possibility of more “adjustments” in the short-run, it’s a good time to BUY. But just be mindful of the RSI, and don’t buy risky assets. Find emerging tech sectors or high-quality companies trading at a discount.For an ETF that attempts to correlate with the performance of the NASDAQ directly, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as when small-caps will be buyable, more thoughts on inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Stocks Love Rising CPI, and Gold Should Too

Stocks Love Rising CPI, and Gold Should Too

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

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

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

Stock Records Were Made to be Broken

Finance Press Release Finance Press Release 12.03.2021 15:20
Records were made to be broken. Thursday's (Mar. 11) session was the embodiment of that.Every index closed in positive territory, and the Dow, S&P, and Russell all closed at record highs. Meanwhile, the Nasdaq led the way again with a 2.52% gain. After touching correction territory two times in the last week, the Nasdaq is up over 6.3% for the week. This is why you buy the dips, and why I said the second, the Nasdaq drops below 13000 support that you should buy.Be bold, a little contrarian, block out the noise, and never try to time the market. Sure, when you buy a dip during uncertain times, you run the risk of encountering more pain. However, in the long-term, stocks trend upwards.For example, do you also know what happened precisely a year ago, on March 11, 2020? The headline on CNBC read like so: Dow plunges 10% amid coronavirus fears for its worst day since the 1987 market. See for yourself.You know what else happened? The market didn't bottom for another 2 weeks and declined another 21%.However, if you bought the Dow-tracking DIA ETF on March 11 and held it this entire time, you'd have gained 40.51%.Imagine if you bought the dip as I recommended for tech.I cautiously said to BUY the QQQ ETF, which tracks the Nasdaq, on February 24 but recommended doing it cautiously and selectively. I doubled down once it dropped below support at 13000 and tripled down once the Nasdaq hovered around 12600 on Monday (Mar. 8).As I said before, the Nasdaq is up over 6.3% this week. If you followed my lead on this, you'd be pleased.Inflation fears and the acceleration of bond yields are still a concern. But let's have a little perspective here. It appears as if things have stabilized for now. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. Plus, jobless claims beat estimates again and came in at 712,000. This is nearly the lowest they've been in a whole year.We will see how President Biden's newly signed $1.9 trillion stimulus package affects yields and inflation. But for now, with the Fed showing no signs of hiking rates shortly and inflation looking tamer than expected, we could see more firepower for stocks.So is the downturn overblown and already finished?Time will tell. I think that we could still see some volatile movements and consolidation to close the week out. That's just what happens with surges and swings like this. While I maintain that I do not foresee a crash like what we saw last March and feel that the wheels remain in motion for an excellent 2021, Mr. Market still has to figure itself out.A broad-based correction of some sort is still very possible. I mean, the Nasdaq's already hit correction territory twice in the last week. Corrections are healthy and normal market behavior. Only twice in the previous 38 years have we had years WITHOUT a correction (1995 and 2017).Most importantly, a correction right now would be an excellent buying opportunity. Once again- look at the Nasdaq since March 8.It can be a very tricky time for investors right now. But never, ever, trade with emotion. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself.You can never time the market.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don't think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- That’s Why I Called BUYFigure 1- Nasdaq Composite Index $COMPCan I flex again, please?Flexing.The Nasdaq's performance this week is why I called BUY despite hitting two corrections in the last week. On Tuesday (Mar. 9), the Nasdaq saw its best day since November. The index's gains continued after that and is now sitting pretty up over 6.3% for the week.If you bought the dip, good on you. It's an excellent time to be a little bit bold and fearless. Take Ark Funds guru Cathie Wood, for example. Many old school investors scoffed at her comments on Monday (Mar. 8) after she practically doubled down on her bullishness for her funds and the market as a whole. After crushing 2020, her Ark Innovation Fund (ARKK) tanked over 30%. Many called her the face of a bubble. Many laughed at her. Tuesday, March 9, ARKK saw its best day in history. Week-to-date, ARKK is up a staggering 16.71%.I'm not saying that we're out of the woods with tech. But I am saying not to try and time the market, not get scared, and have some perspective.The Nasdaq is once again positive for the year, but unfortunately, I no longer think we're at a BUY level. We could see some consolidation and profit-taking to end the week. Still, if we see a significant drop, especially below 13000, it could be a good buy again. It can't hurt to keep nibbling- we're still off the highs. I'm going to stick with the theme of "selectively buying" sub-sectors such as cloud computing, e-commerce, and fintech.I think you should now HOLD and let the RSI guide your Nasdaq decisions. See what happens over subsequent sessions, research emerging tech sectors, and high-quality companies, and buy that next dip.For an ETF that attempts to correlate with the performance of the NASDAQ directly, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as when small-caps will be buyable, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Resting Stock Bulls and Gold Question Marks

Resting Stock Bulls and Gold Question Marks

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

Big Trading Week for Stock Markets

Finance Press Release Finance Press Release 15.03.2021 14:51
Last week went a lot better than the week before. Especially if you’re a Nasdaq bull and bought the dip ( like I recommended Feb 24 ).The real story, though? We’ve still got the Dow, S&P, and Russell firmly at record highs.This week should be full of excitement for the indexes. Will we see more record highs? Will the Nasdaq catch up and recover? How will the newly signed $1.9 trillion “America Rescue Plan” impact the market? Will inflation fears and accelerating bond yields spook investors again?As you can see, there are clearly questions right now for stocks- despite the wheels in motion for pent-up consumer spending and a strong stock rally. Plus, we’ll start having many retail investors with an extra $1,400 to spend looking to have a little fun.Inflation fears and surging bond yields are still a concern and have caused significant volatility for growth stocks. But let’s have a little perspective here. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. Plus, jobless claims beat estimates again and came in at 712,000. This is nearly the lowest they’ve been in a whole year. Last week’s inflation data also came in more tamer than expected.So what should you pay attention to this week?More inflation data, jobless claims, and consumer sentiment will be released throughout the week, for one.But pay incredibly close attention to the Fed. Bonds still remain the market’s biggest wild card. With the Fed meeting Tuesday and Wednesday, bond yields could take their cue from what they say. No action is expected to be taken, and the Fed is expected to indicate more substantial growth. Fed officials are also not expected to alter their interest rate outlook and may stick to the plan of keeping rates this low through 2023.If this goes as expected, bond yields could potentially pop again, reinvigorating the rotation into value and cyclical plays and out of tech and growth plays.Time will tell what happens.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Is the Dow *Gulp* Overbought?Figure 1- Dow Jones Industrial Average $INDUNot much new to report on this. Except for that, it keeps ticking up towards overbought territory and hitting record highs. Year-to-date, we’re now up about 7.1%- almost double what the S&P and Nasdaq have done so far this year.It also managed to gain over 4% this past week.I don’t feel that we’re buyable at all right now. If you have exposure, HOLD and let it ride. Maybe start to consider taking some profits too.The index could greatly benefit from the stimulus package due to all of the cyclical stocks it holds. I can definitely foresee some pops in the index as investors digest the unprecedented amount of money being pumped into the economy, coupled with reopening excitement. But you can’t expect the index to keep going up like this and setting records every day. Plus, the RSI is almost 69 and showing overbought signs.So, where do we go from here?Many analysts believe the index could end the year at 35,000, and the wheels are in motion for a furious rally. But you could do better for a buyable entry point.From my end, I’d prefer to stay patient, assess the situation, and find better buying opportunities.My call on the Dow stays a HOLD, but we’re approaching SELL.For an ETF that aims to correlate with the Dow’s performance, the SPDR Dow Jones ETF (DIA) is a reliable option.For more of my thoughts on the market, such as tech, if small-caps are buyable, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Gold and Stock Bulls Are Getting Ready

Gold and Stock Bulls Are Getting Ready

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

Stock Bulls Run – Will Gold Ones Too?

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

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

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

Stock March Madness - Who you got?

Finance Press Release Finance Press Release 17.03.2021 14:42
Prepare yourself. March Madness could be here. No, I’m not talking about the college basketball tourney either.Stocks will be hanging onto Jay Powell’s every word and every breath on Wednesday (Mar. 17) and scrutinize his thoughts on interest rates and inflation.Pretty much, we’re the Fed’s hostages until this thing gets some clarity. Even if Powell says nothing, the markets will move. That’s just how it’s going to work.Rick Rieder, BlackRock’s CIO for global fixed income, echoed this statement. “I think the last press conference, I think I watched with one eye and listened with one ear. This one I’m going to be tuned in to every word and the markets are going to be tuned in to every word. If he says nothing, it will move markets. If he says a lot, it will move markets.”Jay Powell is the biggest market mover in the game now. What’s coronavirus anymore?So far, it’s been a relatively tame week for the indices. The Nasdaq’s continued playing catch-up and has outperformed, while the Dow and S&P are still hovering around record highs.The wheels are in motion for pent-up consumer spending and a strong stock rally. Plus, we have that $1.9 trillion stimulus package heating up the economy and an army of retail traders with an extra $1,400 to play with.Inflation fears and surging bond yields are still a concern and have caused significant volatility for growth stocks. But let’s have a little perspective here. Plus, jobless claims beat estimates again and came in at 712,000. This is nearly the lowest they’ve been in a whole year. Last week’s inflation data also came in more tamer than expected.But bonds yields still remain the market’s biggest wild card. Yes, yields are still at a historically low level, and the Fed Funds Rate remains 0%. But depending on how things go around 2 pm Wednesday (Mar. 17), yields could potentially pop again, reinvigorating the rotation into value and cyclical plays and out of tech and growth plays.Time will tell what happens.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Russell 2000- Lessons LearnedFigure 1- iShares Russell 2000 ETF (IWM)The Russell 2000 was the biggest laggard on Tuesday (Mar. 16). I think I’m starting to figure this index out, though, for a solid entry point.I have been kicking myself for not calling BUY on the Russell after seeing a minor downturn when the markets got rocked in the second half of February. I may have broken my own rule about “not timing the market” also. I’ve wanted to buy the Russell 2000 badly forever but never thought it dipped hard enough (whenever it did). I was waiting for it to at least approach a correction.But I think I figured out a pattern now. Notice what happened with the Russell almost every time it touched or minorly declined below its 50-day moving average. It reversed. Look at the above chart. Excluding the large crash and subsequent recovery in late-March and April 2020, 5 out of the last 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.Now, look at the index. As tracked by iShares Russell 2000 ETF (IWM) , its rally since November and year-to-date have been mind-blowing. Pretty much, this is the one reason why I’m more cautious about buying the index.Since the market’s close on October 30, the IWM has gained about 51.04% and more than doubled ETFs’ returns tracking the more major indices.Not to mention, year-to-date, it’s already up 19.12% and around at an all-time high.With that $1.9 trillion stimulus package set to greatly benefit small businesses, the Russell 2000 could pop even more.Unfortunately, I’m keeping this a HOLD. But I am monitoring the Russell 2000 closely.Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for. The next time the index approaches its 50-day moving average, I will be a little more aggressive.For more of my thoughts on the market, such as tech, if small-caps are buyable, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Squaring the Bets Prior to the Fed

Squaring the Bets Prior to the Fed

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

Reversing the Fed Moves?

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

Intraday Market Analysis – Sterling Tests Key Resistance

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

Return of the Rising Yields

Finance Press Release Finance Press Release 19.03.2021 14:47
March Madness started on Thursday (Mar. 18), but stocks got the jump on their own brackets this week. Let’s dive in.Although Wednesday (Mar. 17) saw the indices have a nice St. Patrick’s day green reversal thanks to Jay Powell babying us on inflation thoughts again, Mr. Market isn't stupid. Manic, but not stupid. We saw a return to the strong rotation trend out of growth stocks the day after Powell's testimony (Mar. 18).Thursday (Mar. 18) saw bond yields surge to their highest levels in what seems like forever. The 10-year yield popped 11 basis points to 1.75% for the first time since January 2020, while the 30-year rate climbed 6 basis points and breached 2.5% for the first time since August 2019.Predictably, the Nasdaq tanked by over 3% for its worst session in 3-weeks.Jay Powell and bond yields are the most significant market movers in the game now. Get ready for the market next week when he testifies to Congress. That'll be a beauty. What's coronavirus anymore?So after what's been a relatively tame week for the indices, we can officially say bye-bye to that.Bond yields, though, are still at historically low levels, and the Fed Funds Rate remains at 0%. With the Fed forecasting a successful economic recovery this year, with GDP growth of around 6.5% -- the fastest in nearly four decades -- the wheels could be in motion for another round of the Roaring '20s.The problem, though, is that the Great Depression came right after the first Roaring '20s.Many are sounding the alarm. However, like CNBC's Jim Cramer, others think the current headwinds are overblown, and a mirror of the 2015-2016 downturn is based on similar catalysts.Figure 1: Jim Cramer TwitterCramer argued that Powell is a talented central banker willing to "let the economy continue to gain strength so that everyone has a chance to do well."Nobody can predict the future, and these growth stock jitters from rising bond yields may be overblown. But for now, it's probably best to let the market figure itself out and be mindful of the headwinds.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- Another Buyable Dip?Figure 2- Nasdaq Composite Index $COMPThe last time I switched my Nasdaq call to a BUY on Feb 24 , that worked out very well. I will use the same criteria again for the Nasdaq as the market figures out bond yields: The RSI and the 13000 support level. I need the Nasdaq’s RSI to dip below 40 while also falling below 13000 before buying.We’re not quite there. This is an excellent dip, but it’s really only one down day and its worst down day in weeks. I think we may have some more buying opportunities next week if bond yields pop due to Jay Powell’s testimony. I mean, it seemingly always happens after he speaks.Pay very close attention to the index and its swings.If the tech sector takes another big dip, don’t get scared, don’t time the market, monitor the trends I mentioned and look for selective buying opportunities. If we hit my buying criteria, selectively look into high-quality companies and emerging disruptive sub-sectors such as cloud computing, e-commerce, and fintech.HOLD, and let the RSI and 13000-support level guide your Nasdaq decisions. See what happens over subsequent sessions, research emerging tech sectors and high-quality companies, and consider buying that next big dip.For an ETF that attempts to correlate with the performance of the NASDAQ directly, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as a potentially overbought Dow Jones, small-caps, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Breaking the Spell of Rising Yields

Breaking the Spell of Rising Yields

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

Tide Is Turning in Stocks and Gold

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

Intraday Market Analysis – Awaiting A Breakout

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

Dangerous Game of Chicken

Monica Kingsley Monica Kingsley 23.03.2021 15:32
Monday‘s higher stock prices don‘t mean that the sky is the limit now – there were quite a few signs of weakness in related markets as well. The put/call ratio moved lower agains, and so did VIX. But it‘s the market internals that are the giveaway sign – technology has been the predictable upswing driver, reflecting my yesterday‘s thoughts on the rising yields pressure:(…) One daily move doesn‘t make a trend change likely though, especially since the Mar pace of TLT decline is on par with Feb‘s and higher than in Jan. While Treasuries paused in early Mar, they‘re now once again as extended vs. their 50-day moving average as before.And that poses a challenge for interest rate sensitive stocks and to some degree also for tech - while I expect value to continue to lead over growth, technology would recover some of the lost ground on rates stabilization. And it‘s true that the $UST10Y move has been a very sharp one, more than tripling from the Aug 2020 lows.We got that reprieve yesterday, and tech jumped on board enthusiastically, while other usual beneficiaries didn‘t – utilities didn‘t move, but at least consumer staples swung higher. Coupled with the value stocks mostly treading water yesterday, it makes for a weak daily market breadth. The key events of today and tomorrow are the Congress testimonies – while Powell is set to downplay inflation, inflation expectations and still overall elevated / rising long-dated Treasury yields, it‘s my view that the market is again squaring the bets, best seen in the commodities lately (think Thursday and today) – but I look for the Fed to project the same messaging it did on Wednesday, and perhaps double down on it.I don‘t view the market as in danger of a deflationary collapse, not when the stimulus avalanche is hitting and the Fed is reluctant to change course. I am not looking for them to telegraphs such a turn today or in the weeks to come, and that would mean recovery in the commodity prices.Gold is an island of relative, temporary peace, but the miners are concerningly weakening – both gold and silver ones. Darkening clouds here regardless of the support the copper to 10-year Treasury yields can offer. Still, the yellow metal has decoupled from rising nominal yields to a remarkable degree lately.Let‘s quote yesterday‘s observations:(…) As gold is arguably the first asset to move in advance of a key policy move, it might be sensing the Fed being forced (i.e. the markets betting against the Fed) to moderate its accomodative policy. Twist, taper – there are many ways short of raising the Fed funds rate that would help put pressure off the sliding long-dated Treasuries, not that these wouldn‘t be susceptible to move higher from oversold levels. And just like the yellow metal frontrunned the Fed before the repo crisis of autumn 2019, we might be seeing the same dynamic today as well.For the cynical and clairvoyant ones, we might sit here in 3-6 months over my notes on „the decoupling that wasn‘t“ - all because rates might snap back from the current almost 1.8% on the 10-year bond.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookBoth the volume and upper knot are short-term suspect on yesterday‘s S&P 500 upswing – I wouldn‘t be surprised by continued consolidation unless the testimonies today and tomorrow, bring a game changer.Credit MarketsHigh yield corporate bonds (HYG ETF), and the volume comparison to preceding day looks here better than in stocks. Still, it can‘t be said the move either in HYG or in investment grade corporate bonds (LQD) was a bullish rush. These two markets merely joined in the long-dated Treasuries recovery, not signalling return of animal spirits.Technology, Financials and UtilitiesSuch a sectoral view of rising tech (XLK ETF), for a few sessions weakening financials (XLF ETF) and unconvinced utilities (XLU ETF) isn‘t a bullish constellation to drive the 500-strong index reliably ahead at breakneck speed really.Gold in the SpotlightSimilarly to Mar 12, the precious metals upswing is being challenged – miners (GDX ETF) are underperforming. Today‘s session will tell whether we‘re witnessing consolidation, or a renewed rollover to the downside, the chances of which have risen yesterday.The weekly view remains positive – the pace of gold‘s decline became less sensitive to nominal yields move, turning higher before these did, and currently not making much headway. Still, that‘s arguably the clearest sign of the turning tide in the gold market.Silver, Silver Miners and CopperSilver is getting under pressure on rising volume, and its miners are declining too, highlighting increasing risks to the white metal. Disregarding today‘s premarket action, that alone makes it worthwhile to dial back (take profits off the table) in the long silver short gold spread I introduced you to on Feb 12. It‘s that the degree of momentary commodities underperformance looks like taking a meaningful toll on the white metal (and that concerns oil as well, which would turn short-term bearish with a breakdown below $57 to $57.50 on a closing basis and on high volume without a prominent lower knot.SummaryS&P 500 upswing isn‘t as strong as it might seem, and today‘s deceptively small downswing has the potential to turn ugly on Fed missteps. Seeing these happen, I don‘t view as a leading scenario for today or tomorrow, however.Gold and for that matter silver bulls too, have to prove shortly that the upswing isn‘t taking more than a pause – that is, that it isn‘t rolling over. The signals from the commodities space aren‘t encouraging, and platinum trading isn‘t helping to clarify the outlook for today‘s session either.
Powell Sounds Dovish, but Is He Dovish Enough for Gold?

Powell Sounds Dovish, but Is He Dovish Enough for Gold?

Finance Press Release Finance Press Release 23.03.2021 16:13
Although dovish, Powell downplayed the bond yield rally. The Fed’s more tolerant stance on inflation is good for gold, but the metal may continue its bearish trend in the short-term.In the last edition of the Fundamental Gold Report, I analyzed the latest FOMC statement on monetary policy and economic projections . Today, I would like to focus more on Powell’s press conference . My reading is that the Fed Chair sounded like a dove. First of all, he emphasized several times that the jump in inflation this year will be only transient , resulting from the base effects and rebound in spending as the economy continues to reopen. And Powell explicitly stated that the US central bank will not react to this rise in consumer prices (emphasis added):Over the next few months, 12-month measures of inflation will move up as the very low readings from March and April of last year fall out of the calculation. Beyond these base effects, we could also see upward pressure on prices if spending rebounds quickly as the economy continues to reopen, particularly if supply bottlenecks limit how quickly production can respond in the near term. However, these one-time increases in prices are likely to have only transient effects on inflation (…) I would note that a transitory rise in inflation above 2 percent, as seems likely to occur this year, would not meet this standard [i.e., the Fed’s goals of maximum employment and stable prices].Second, Powell also pointed out that we are still far, far away from reaching the Fed’s employment and inflation goals. So, investors shouldn’t expect any hikes in the interest rates or any taper tantrum anytime soon. He was very clear on that, saying that it’s not yet time to start talking about tapering, and that the Fed will announce well in advance any decision to taper its quantitative easing program. Indeed, in a response to the question “is it time to start talking about talking about tapering yet”, he said:Not yet. So, as you pointed out, we’ve said that we would continue asset purchases at this pace, until we see substantial further progress. And that's actual progress, not forecast progress. (…) We also understand that we will want to provide as much advance notice of any potential taper as possible. So, when we see that we’re on track, when we see actual data coming in that suggests that we're on track to perhaps achieve substantial further progress, then we'll say so. And we'll say so well in advance of any decision to actually taper.Third, the Fed Chair reiterated a few times that the Fed’s changed its approach and it will not react to the forecast progress, but only to the actual progress , stating that:the fundamental change in in our framework is that we’re not going to act preemptively based on forecasts for the most part. And we’re going to wait to see actual data (…) And we’re committed to maintaining that patiently accommodative stance until the job is well and truly done.It makes some sense, of course, but it also increases the risk that the Fed’s response to rising inflation will be delayed. The same stance was adopted in the 1970s, when the central bankers believed that they would have plenty of time to react to any dangerous increases in consumer prices. But such an approach resulted in inflation getting out of control, leading to great stagflation . Gold shined then.Implications for GoldWhat does this all mean for the gold prices? Well, latest Powell’s remarks were dovish, which should support the yellow metal. But, as the chart below shows, we don’t see such a support reflected in the gold prices (London P.M. Fix).Part of the problem is that the bond yields continued to rise, after a short pullback amid the FOMC statement, exerting further downward pressure on the gold prices. A related issue here is that although Powell sounded generally dovish , he expressed a relaxed view on the current rally in the interest rates. Indeed, when replying to a question on the bond selloff, Powell just said that “we think the stance of our monetary policy remains appropriate”. So, his comments imply that the bond yields have room to move further up in the near-term, thus hurting the price of gold .However, there is certainly a level of interest rates that would be uncomfortable for the Fed (and Treasury), forcing it to intervene more decisively in the financial markets, and we’re not necessarily far from this level. Furthermore, given the rising inflation and inflation expectations, the real interest rates should rise at a slower pace than the nominal yields, and if they do actually fall, they would support the price of gold.If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Intraday Market Analysis – Bearish Breakout

Intraday Market Analysis – Bearish Breakout

John Benjamin John Benjamin 24.03.2021 07:31
GBPUSD cuts through major supportThe pound saw fresh sell-off despite a fall in the UK’s unemployment rate as average earnings, an indication of inflation remained subpar.Two failed attempts to breach the psychological level of 1.4000 have put the short side back in control. The bearish breakout below 1.3800 has intensified the selling pressure by triggering stop-losses and would call 1.3650 as the next target.In the meantime, as the RSI dipped into the oversold area, a brief pullback to around 1.3850 might fill more sell orders.XAUUSD breaks out of consolidation rangeGold came under pressure as the US dollar claws back losses from previous sessions.On the daily chart, the price is entangled between the 20 and 30-day moving averages which act as resistance after the February sell-off.Zooming into the hourly chart, the precious metal has been struggling near the supply area 1750-55.The narrowing trading range between the resistance and the rising trendline is a prelude to a breakout, and a close below 1728 would resume the downtrend with 1700 as the target.SPX 500 slides on profit-takingAs a reminiscence of the trade war, brewing international tensions with China could derail investor sentiment once again. After a two-week-long rally, the S&P 500 has retreated from its peak at 3989 in search of stronger support.Divergence between the price action and the RSI was a sign of exhaustion. Then successive breakouts below 3936 and 3911 prompted short-term traders to take profit.The latest rally could be a dead cat bounce unless it achieves a new high. To the downside, 3860 would be the next stop.
Bitcoin, no genius required

Bitcoin, no genius required

Korbinian Koller Korbinian Koller 24.03.2021 09:44
Why do we mention this? Bitcoin is in a massive uptrend right now, and we are about to see another leg up. Typically, the choice of participating or staying sidelined is with more minor consequences than this time around. We are in a wealth transferring market cycle. An event happening typically every 93 years. An event at the end of a fiat currency dissolving into hyperinflation and leaving many in despair. E.g. have you noticed your grocery bill being over 20% higher and mass media not mentioning it? Get informed and not mislead and do not wrongly be instructed that this bitcoin ship has sailed and there are no ways to participate at these levels. They will look timid in a few years to come.S&P-500 Index, Weekly Chart, Warning signs of a larger cycle ending:S&P 500 Index in US Dollar, monthly chart as of February 19th, 2021.We posted a similar to the above chart on February 19th in our weekly Silver chartbook to indicate a possible extended stock market with a more than typical retracement possibility.S&P-500 Index, Weekly Chart, Double top with Indicator divergence confirmation:S&P 500 Index in US Dollar, weekly chart as of March 22nd, 2021.Now only five weeks later, we see the first possible cracks. The weekly chart shows a possible directional change with divergences in both a directional indicator (Stochastic in yellow) and a momentum oscillator (Commodity Channel index in white), confirming this suspicion through divergences. Hence, we might get a trend reversal over the next few weeks or months. BTC-USDT, Daily Chart, Possible breakout (Short to midterm):Bitcoin in US Dollar, daily chart as of March 23rd, 2021.While due to the need to cover margin calls an actual market crash would temporarily drag all asset classes down, in the early stages of a trend direction change, money would flow from the stock market into safety asset classes like Bitcoin. The chart above shows Bitcoin in a consolidation phase that looks to resolve through a breakout to the upside. Besides, we find fractal volume transaction support at the US$50,870 price level.BTC-USDT, Weekly Chart, Bitcoin, no genius required:Bitcoin in US Dollar, weekly chart as of March 22nd, 2021.The weekly chart of Bitcoin illustrates the health of the recent trend extension. Price is trading above directional support (yellow trendline) and within the norm of Fibonacci retracement levels.Bitcoin, no genius required:Systems promising more than a hundred percent returns earned within a year, sell at exorbitant prices. You do not need to have such returns as compound interest takes very well care for those getting consistent. Why would vendors sell these unique methodologies instead of making their own fortunes with them?In short, you need high-quality principle-based guidelines, apply hard work and be independent of the good opening of others versus getting fooled by “rich quick” schemes and fool’s gold promises. There is no genius required, just good old hard work like in any other field that requires mastery for competition level.If trading were a mathematical competition, we would find all rocket scientists to be the winners in this game. But the is far from the truth. Instead, it is precisely the opposite based on a simple principle distinction. The mathematical mind seeks a precise and optimal solution. It aims at a reduction to a constant. This approach fails the high degree of aspects defining the human psyche and all the grey zones that come with it. It is much more essential to find a trading approach that fits your personality.Consequently, eliminate any system purchase. One needs to work refining one’s own path. One needs to find a niche in the time frame, market, and volatility to one’s specific personal makeup.Feel free to join us in our free Telegram channel for daily real time data and a great community.If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.By Korbinian Koller|March 23rd, 2021|Tags: Bitcoin, Bitcoin correction, Bitcoin mining, crypto analysis, crypto chartbook, crypto mining, low risk, quad exit, technical analysis, trading education|0 CommentsAbout the Author: Korbinian KollerOutstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent. Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.
One Year From Stocks Bottom

One Year From Stocks Bottom

Finance Press Release Finance Press Release 24.03.2021 14:37
Next edition of this newsletter, we’re going to do a special on REITs. We will discuss which real estate sectors could see significant recovery after a brutal 2020.Which real estate sectors could be long-term solid bets? There are a few you might not be thinking of, and we will also discuss why REITs could be a great hedge against rising bond yields and inflation scares.Do you realize what Tuesday (Mar. 23) marked? One year since the market bottomed. Can you believe that it’s already been a year? Calling it a roller coaster is an understatement.One of the most crucial market concepts is that the market never looks back. It is a forward-looking instrument. Talking about the past as it relates to the market really doesn’t do anyone any good.However, after the year we’ve had, it’s essential to take a breath, reflect, and see what lessons we can learn from.Ethan Wolff-Mann, a Senior Writer for Yahoo! Finance, put out a great article, “ What we have learned in the 12 months since ‘the bottom ’” and discusses several key points:‘Every crisis is the same’Panic can hurt a portfolioYou genuinely don’t know what’s going to happenRebalancing comes out as a huge winnerAs we sit here a year later, we can finally see the light at the end of the tunnel. Vaccines are weeks away from being available to all adults over 16 in the U.S., while COVID numbers continue to drop. But we are still confronting the reality of a pandemic that is still raging in Europe and other parts of the world. Inflation signs are flashing, and unstable bond yields are scaring tech investors every few days. But keep the above lessons in mind.My personal biggest takeaway from the last year that I have applied since the several market downturns we’ve had thus far in 2021? Nobody can predict the future and never ever try to time the market. Many investors a year ago didn’t stick it out through the volatility and lost out. Some panic sold near the bottom and never bought back in.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:A year after we bottomed, there is optimism but signs of concern. The market has to figure itself out. More volatility is likely, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Russell 2000- Time to Pounce?Figure 1- iShares Russell 2000 ETF (IWM)I kicked myself for not calling BUY on the Russell after seeing a minor downturn during the second half of February. I also realized I may have broken my own rule about “not timing the market.” I’ve wanted to buy the Russell 2000 forever but never thought it dipped hard enough (whenever it did). I was waiting for it to at least approach a correction.But once I looked at the iShares Russell 2000 ETF (IWM) chart, I had an epiphany. I noticed that almost every time it touched or minorly declined below its 50-day moving average, it reversed.The chart does not lie. Look at it above. Excluding the recovery in April from last year’s crash, 5 out of the previous 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.Fast forward to Tuesday (Mar. 23). The Russell 2000 saw its worst day since February 25- and I loved every second of it. I felt almost similar to how I felt over the weekend during March Madness when I correctly called 13 seed Ohio to upset 4 seed defending NCAA champion Virginia. Finally, after weeks of waiting for a time to pounce on the Russell 2000 and missing golden opportunities, I think the time has come. We’re back right below its 50-day.Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for.I’m finally switching this to a BUY.For more of my thoughts on the market, such as inflation fears and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Powell and Yellen Sound Upbeat. Don’t They Like Gold?

Powell and Yellen Sound Upbeat. Don’t They Like Gold?

Finance Press Release Finance Press Release 25.03.2021 14:40
Both Powell and Yellen testified before Congress. They sounded upbeat on the U.S. economy, but gold’s reaction was weak.What a combo! Both Fed Chair Jerome Powell and the U.S. Treasury Secretary Janet Yellen testified before Congress this week. They spoke about the economic response to the economic crisis caused by the Covid-19 pandemic and the Great Lockdown .In his prepared remarks , Powell sounded rather hawkish , as he noted that “the recovery has progressed more quickly than generally expected and looks to be strengthening.” As well, during the Q&A session, the Fed Chair seemed to be very confident about the economy and the central bank’s monetary policy . In particular, Powell told senators that 2021 was “going to be a very, very strong year in the most likely case.”He also downplayed worries about higher inflation expressed by some lawmakers, arguing that the environment of low inflation we have observed for years before the epidemic won’t change anytime soon:We think the inflation dynamics that we’ve seen around the world for a quarter-century are essentially intact — we’ve got a world that’s short of demand, with very low inflation. We think those dynamics haven’t gone away overnight, and won’t.And Powell dismissed concerns about the supply disruptions as well, saying that “a bottleneck, by definition, is temporary”.In a sense, Powell is right. A lot of supply disruptions are short-lived. But there are more inflationary factors operating right now, to name just a surge in the broad money supply . So, I’m afraid that he might be too conceited and understated the risk of higher inflation. You know, a lot of economic trends last – until they don’t. I’m referring here to the fact that the macroeconomic conditions change not gradually but rather abruptly. Inflation may remain low as long as inflation expectations are well-anchored, but if they become unanchored, inflation may rise quickly.Importantly, Powell was also unmoved by the recent rally in the bond yields :Rates have responded to news about vaccination, and ultimately, about growth (…) In effect there’s been an underlying sense of an improved economic outlook (…) That has been an orderly process. I would be concerned if it were not an orderly process, or if conditions were to tighten to a point where they might threaten our recovery.Yellen also sounded rather hawkish in her prepared remarks , as she wrote that “we may see a return to full employment next year.” Yellen also admitted that asset valuations are high, but that she wasn’t worried about financial stability, nevertheless: “I’d say that while asset valuations are elevated by historical metrics, there’s also belief that with vaccinations proceeding at a rapid pace, that the economy will be able to get back on track”. However, she argued that economy needed more help to recover fully.Importantly, Yellen admitted that higher taxes would be likely needed to raise revenues for increased government spending: “But longer run, we do have to raise revenue to support permanent spending”. Tax hikes could be negative for Wall Street and the economy, and thus, supportive for the price of gold.Implications for GoldWhat do Powell and Yellen’s testimonies imply for the gold prices? Well, the two most important economic figures in the U.S. didn’t surprise the markets, so the yellow metal reacted little to their statements, as the chart below shows.However, as both Powell and Yellen sounded rather optimistic about economic growth this year, their remarks might prove negative for the yellow metal. What can be particularly bad for gold is Powell’s calm stance regarding the rising bond yields. Of course, he could just put a good face on higher interest rates , but gold would prefer a more dovish stance. However, gold’s lack of a larger bearish reaction to rather upbeat testimonies from Powell and Yellen can actually be taken as an optimistic symptom. Anyway, a more accommodative stance of the Fed would be very helpful for the yellow metal.If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Gold & the USDX: Correlations

Risk-off Is Back Again

Monica Kingsley Monica Kingsley 25.03.2021 15:44
Stocks reversed yesterday, and the close below 3,900 indicates short-term weakness instead of muddling through in a tight range. Especially the sectoral reaction to still retreating yields, is worrying. Yesterday‘s session means a reality check for prior reasonable expectations:(…) The index is likely to advance, but the engine is going to be tech this time – not value stocks. I view this as a deceptive, fake strength in the bull market leadership passing over to value inevitably next. That‘s why I expect the S&P 500 advance to unfold still, a bit rockier than it could have been otherwise. Tech faltered yesterday, and neither the other sectors were convincing. Rotation within stocks didn‘t work yesterday or the day before, and that‘s short-term concerning for the stock market bull health – as in, the path ahead would be truly rockier, and accompanied by brief, sharp selloffs such as the one bringing S&P 500 futures to 3,865 moments ago. The bull market isn‘t though over by a long shot – all we‘re going through is a recalibration of the rising inflation – I still stand by my year end call for $SPX at 4200.It‘s commodities that are under the greatest pressure now, and the copper and oil signals doesn‘t bode well for the immediate future. These are likely starting consolidation of post-Nov 2020 sharp gains – they are no longer frontrunning inflation expectations. This has also consequences for silver, which is more vulnerable here than the yellow metal now.Gold is again a few bucks above its volume profile $1,720 support zone, and miners aren‘t painting a bullish picture. Resilient when faced with the commodities selloff, but weak when it comes to retreating nominal yields. The king of metals looks mixed, but the risks to the downside seem greater than those of catching a solid bid.That doesn‘t mean a steep selloff in a short amount of time just ahead – rather continuation of choppy trading with bursts of selling here and there. What could change my mind? Decoupling from rising TLT yields returning – in the form of gold convincingly rising when yields move down. Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookWhile yesterday‘s volume isn‘t consistent with a true reversal, it still says we‘re not done with the downside, which however shouldn‘t reach all too far. Force index on the other hand, looks as starting its decline, so the short-term picture is mixed. Whether the 50-day moving average test would lead to a rebound, is an open question – but I think it will.Credit MarketsThe high yield corporate bonds to short-dated Treasuries (HYG:SHY) ratio gave up all of yesterday‘s gains, but isn‘t leaving stocks as extended here. Much depends upon whether squaring the risk-on bets would continue, or not. Both stocks and the ratio appear consolidating here, and not rolling over to the downside.Technology and FinancialsTechnology (XLK ETF) showing weakness while financials (XLF ETF) aren‘t yet ready to run – that‘s a fair description of the moment. What‘s most concerning, is the tech weakness on still rising long-term Treasuries.Treasuries and Inflation ExpectationsVolume behind the TLT upswing is drying up, and S&P 500 sectors are sensing another turn to the downside. Utilities aren‘t getting anywhere while $NYFANG is as weak as could reasonably be, which doesn‘t bode well for stocks.Commodities showed daily resilience as inflation trades meekly turned around – but make no mistake, inflation expectations runup appear getting questioned on a short-term basis, and the more volatile commodities feel that.Gold and MinersThe precious metals sector remains under pressure, and the renewed and visible miners underperformance highlights that. Yesterday‘s gold upswing happened on lower volume than the preceding downswing, adding to the woes. Silver though remains more vulnerable to the downside than gold, and miners aren‘t painting a bullish picture at all.SummaryWith the tech underperformance returning to the fore, the S&P 500 is short-term exposed, but the momentarily elevated put/call ratio looks as marking not too much downside left as prices approach the 50-day moving average. Once value stocks turn upwards, the stock bull market would be running again.Until gold and silver miners show outperformance again, both metals remain vulnerable to short-term downside – silver more so than gold, which could catch a bid as a safe haven play. But should gold strength return on declining yields, that would be another missing ingredient in the precious metals bull market.
Is Silver the New Gold?

Is Silver the New Gold?

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

The REIT Special - An Inflation Hedge

Finance Press Release Finance Press Release 26.03.2021 15:01
In the premium editions of my newsletters, you know that I have been consistently touting the iShares Cohen & Steers REIT ETF (ICF) as a potential hedge against inflation.In this REIT Special Edition, I will break down the WHY. But not, we aren’t going to just talk about the ICF ETF. We will dig into what specific real estate sectors you might want to consider when looking at REITs to invest in.But first and foremost, what is a REIT, and why are they such strong bets right now?Let’s just say, if you want to invest in real estate but do not necessarily have the capital, you will want to read on. If you don’t have the patience for illiquid assets like buildings, you will want to read on. And suppose you want the easiest, most convenient way to diversify your portfolio and add real estate exposure. You will want to read on.A REIT, or real estate investment trust, is a company that owns, operates, or finances income-producing real estate assets. Think of REITs as mutual funds for real estate. REITs pool the capital of numerous investors.For the most part, REITs trade on public exchanges like stocks, which makes them highly liquid, unlike physical real estate assets. But the thing I love most about REITs? They also almost mirror the consistent income streams you can get from real estate assets. REITs pay some of the best and most consistent dividends on the market. All while you as an investor don’t have to get your hands dirty and buy, manage, or finance the property.REITs invest in almost every real estate sector. However, in this edition, we will focus specifically on multifamily, hospitality, industrial, and healthcare. Why? Multifamily and hospitality could see substantial recoveries after 2020. Industrial and healthcare had strong 2020s and could continue to succeed in 2021 and long after.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. MultifamilyFigure 1- iShares Residential Real Estate ETF (REZ)Multifamily or residential REITs own and operate apartment buildings and/or manufactured housing.The most important factors to focus on when researching multifamily REITs are affordability, population growth, and job growth. For example, large cities such as New York and LA have higher living costs and more renters. But their job growth and population growth are severely lagging right now. You want large urban centers that show strong in-migration trends and job growth.Figure 2: Marcus & Millichap Forecast Consider the multifamily market in the Sunbelt and Mountain region. Even before COVID, there was a migration boom and significant employment growth, especially in the Sunbelt region. Plus, this region didn’t lock down as strictly as big cities like New York and LA and saw fewer job losses during the pandemic.The Mountain region is also seeing a rapidly growing population, a strong quality-of-life, and affordable living costs. Do you know the ONLY state that saw year-over-year job growth for total nonfarm payrolls in January 2021 while also leading in year-to-date growth? Idaho .While multifamily growth will be likely be fragmented based on region, there are two ways you can play this:Research individual REITs with the most exposure to growing regions.Add broad-based exposure to multifamily assets through ETFs like the iShares Residential Real Estate ETF (REZ) . While this ETF does not focus EXCLUSIVELY on residential REITs, as it has exposure to healthcare and self-storage, too, this is an easy and convenient way to give yourself multifamily exposure.For more of my thoughts on REITs focusing on hospitality, office, industrial, and healthcare, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Why It‘s Reasonable to Be Bullish Stocks and Gold

Why It‘s Reasonable to Be Bullish Stocks and Gold

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

What Could Slay the Stock & Gold Bulls

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

The Three Pillars for Stocks

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

Liquidity Boost for Stocks and Gold?

Monica Kingsley Monica Kingsley 30.03.2021 15:53
Friday‘s great run gave way to yesterday‘s consolidation, and stock bulls appear in need of more before taking out the psychological 4,000 mark. The Archegos crash isn‘t causing contagion fears the way GameStop in late Jan did. The current volatility and put/call ratio simply doesn‘t reflect that.The theme is still one of reflation – while inflation expectations are rising, and so are the inflation data for those who care to examine them closely enough, true inflation isn‘t yet here with us. Markets are merely transitioning to a higher inflation environment already, not buying the Fed‘s transitory explanation. Commodities are basing at the conquered levels before another run higher.Make no mistake though, the current S&P 500 upswing is heavily reliant on the defensive sectors – technology isn‘t standing in the way, utilities and consumer staples are doing great, and so are several areas within the real estate sector such the residential one, or REIT ETFs that can be expected to keep doing well. Couple that with value stocks not really retreating, and you get the current view of S&P 500 advance structurally.Credit markets though are a little lagging behind – thanks to the return of rising yields, working its predictable magic on investment grade corporate bonds as well. Such were my points from yesterday‘s extensive analysis, diving into the big picture across the markets and the economy:(…) With 10-year Treasury yields at 1.67%, last week‘s decline didn‘t reach far before turning higher. Remembering stock market woes the first breach of 1.50% caused, stocks have coped well with the subsequent run up – while in the old days of retirees actually being able to live off interest rate income, a level of 4% would bring about trouble for S&P 500, now the level is probably just above 2%. Yes, that‘s how far our financialized economy has progressed – and I look for volatility to rise, and stocks to waver and likely enter a correction at such a bond market juncture. As always, I‘ll be keeping a close eye on the signs, emerging or not, as we approach that yield level.The bond market isn‘t merely anticipating an economic recovery that has good chances of overheating still this year, it‘s also reacting to:(…) the fresh money avalanche, activist fiscal and moterary policy to hit the markets as a tidal wave. Modern monetary theorists‘ dream come true. Unlike during the Great Recession, the newly minted money isn‘t going to go towards repairing banks‘ balance sheets – it‘s going into the financial markets, lifting up asset prices, and over to the real economy. So far, it‘s only PPI that‘s showing signs of inflation in the pipeline – soon to be manifest according to the CPI methodology as well.Any deflation scare in such an environment stands low prospects of success. Continuing:(…) For deflation to succeed, a stock market crash followed by a depression has to come first. And as inflation is firing on just one cylinder now (asset price inflation not accompanied by labor market pressures), it isn‘t yet strong enough to derail the stock bull run. The true inflation is a 2022-3 story, which is when we would be likely in a full blown financial repression and bond yields capped well above 2% while inflation rate could run at double that figure. Then, the Fed wouldn‘t be engaged in a twist operation, but in yield curve control, which the precious metals would love, for they love low nominal and negative real rates.As I wrote on Twitter, it‘s a question of time when gold starts anticipating the policy turn, snifffing it out just like the Fed having to abandon hawkish positions of late 2018, or the runup to the repo crisis of autumn 2019. We got quite a few decoupling signs, some on prolonged basis, but gold isn‘t yet leading commodities the way it did both before and after the corona deflationary shock. Let‘s not forget about the currencies and arbitrage opportunities there – the yen carry trade is still very much alive, making it a no brainer to borrow in declining currency while parking the proceeds elsewhere – and the one-way trading in $USDJPY in 2021 is a fitting testament thereof. A powerful argument against deflation on our doorstep, by the way.Quite to the (deflationary shock) contrary at the moment – both commodities and precious metals are under pressure in today‘s premarket session. Another undoing of the miners‘ outperformance?Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookDaily consolidation on average volume – no hinting at serious troubles down the road. Buy the dip mentality still rules the day.Credit MarketsHigh yield corporate bonds (HYG ETF) chart looks a bit tired to the upside – the bulls had to defend against a serious downswing yesterday first. Contracting volume precedes rising volume, and the best the bulls can hope for, is sideways trading coupled with downswing rejection followed by another move higher.Technology and ValueTechnology (XLK ETF) repelled an intraday downswing while value stocks (VTV ETF) merely couldn‘t keep up all the gained ground during the day. So far so good in the run up or base building on the path to new all time highs.Gold in the SpotlightThe daily resilience in the miners would come under heavy pressure today, and GDX can be expected to close lower. Would they still show outperformance vs. the yellow metal? I wouldn‘t bet the farm on it – it appears the Mar 04 game plan will be tested soon instead.Miners to gold (black line) still keeps painting a bullish picture on the weekly chart, as it refuses to follow the yellow metal to the downside. Where would it be should the $1,670 support zone get tested again – would that level be sufficient enough to power a rebound?Silver, Miners and CopperSilver clearly illustrates the sectoral weakness – the selling waves get harder to repel, and upswing attempts are happening on lower volume. While copper goes sideways, the white metal is breaking lower, and its miners aren‘t showing any strength at all.SummaryS&P 500 keeps consolidating Friday‘s gains without signs of upcoming, groundbreaking weakness. With volatility at around 20, the path of least resistance remains overall higher – until tech says no more. Again, no hint at that today still.Gold is again approaching the $1,670 support, and miners‘ performance will send as valuable clues just as before the Mar 08 bottom. Given today‘s downswing, that will be an even more important indication, bearing medium-term consequences as well.
Has Gold “Ever Given” to You?

Has Gold “Ever Given” to You?

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

Tax Hikes are Coming

Finance Press Release Finance Press Release 31.03.2021 15:54
End of the month and first quarter of 2021. Is time going fast or slow? Markets have been moving at a dizzying pace to start the year.As a side note, this will be our last newsletter for this week because the market is closed on Friday (Apr. 2).The first quarter of 2021 is officially almost finished. Time flies when you’re having fun, right? While a broad correction did not happen by now, as I expected, the Nasdaq did enter correction territory twice since February. Despite the Nasdaq’s muted moves on Tuesday (Mar. 30), it’s right on the edge of its third foray into correction territory.The market themes remain. There is still as much uncertainty for tech stocks today as there were at the start of March. Until there’s some clarity on inflation and bond yields, I can’t foresee this ending anytime soon.Consider this too. President Biden is about to unveil a $2 trillion infrastructure plan during Wednesday’s session (wasn’t it supposed to be $3 trillion?). While this is great for America’s crumbling infrastructure, let’s be honest- does this economy, while recovering, need anymore spending?Plus, how do you think he will pay for this? Hiking taxes- namely corporate taxes . Those gains that high growth stocks saw after Trump cut corporate taxes in 2017 could very well go away. The market may have priced in a lot of optimism. It may have already priced in some pessimism from potential inflation. But one thing it has not priced in is a possible tax hike.This concerns me.Rising bond yields + Rising taxes= A double whammy of bad news for tech stocks.However, despite the “what ifs,” for now, three pillars remain in motion as a strong backdrop for stocks:VaccinesDovish monetary policy full of stimulusFinancial aidMy goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:The market has to figure itself out.More volatility is likely, and we could experience more muted gains than what we’ve come to know over the last year. Inflation, interest-rate worries, and the potential for tax hikes should be the primary tailwinds. However, a decline above ~20%, leading to a bear market, appears unlikely for now.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Russell 2000- Time to Pounce?Figure 1- iShares Russell 2000 ETF (IWM)The climate right now supports the Russell 2000. The current economic policy is tailor-made for small-caps. The best part, though? The Russell is still very buyable.I kicked myself for not calling BUY on the Russell after it saw a minor downturn during the second half of February. I wasn’t going to make that mistake again.After the iShares Russell 2000 ETF (IWM) went on its latest rally to start March, I checked out the chart. I noticed that almost every time it touched or minorly declined below its 50-day moving average, it reversed.Excluding the recovery in April from last year’s crash, 5 out of the previous 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.Fast forward to Tuesday (Mar. 23). The Russell 2000 saw its worst day since February 25, dropped below its 50-day, and I switched the call to a BUY.Now, as we start the final week in March, we may be looking at the 6th reversal after dipping below its 50-day. The IWM has been up about 3% since March 24.Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for.Consider this too. The Russell is on track for its first losing month in almost five months. According to the chart, it may have also found double-bottom support.Based on macro-level tailwinds, its first losing month in five, potentially finding double-bottom support, its RSI, and where it is in relation to the 50-day moving average, I feel that this is a solid time to BUY.For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Gold & the USDX: Correlations

Stocks, Gold and the Troubling Yields

Monica Kingsley Monica Kingsley 31.03.2021 16:03
Yesterday‘s consolidation in stocks was a bullish one, and the S&P 500 upswing has good prospects of proceeding unimpeded. Strange but true if you consider that also a plan to considerably raise taxes would be announced today, so as to help pay for the stimulus wave. The bond markets are calmly overlooking that so far, enabling the run to the 4,000 mark.And it still appears a question of time. Inflation isn‘t yet biting (forget about the German CPI data for now), fresh money keeps hitting the markets, and Archegos is about to become a distant memory. Stocks seem immune to the rising yields spell at the moment, meaning that value trades can remain at elevated levels while technology is stuck in no man‘s land and defensives are consolidating recent sharp gains (consolidating until the rising yields come back with vengeance).And there is little reason given the Fed‘s stance why they shouldn‘t. Much of the marketplace is buying into the transitory inflation story, and inflation expectations aren‘t yet running too hot. As the economic growth is stronger than current or future inflation, we‘re still at a good stage in the inflation cycle – everyone benefits and no one pays.When such reflation starts to give way to decreasing or stagnant growth rates accompanied by rising inflation metrics, the stock market performance stops being as positive as it had been since the Mar 2020 bottom. At such a time, the current transitioning to a higher inflation environment would be at a very different (commodity prices) stage, and so would the bond yields (no longer well below 2% on 10-year Treasuries).Points made in my Monday‘s extensive analysis, ring true also today:(…) With 10-year Treasury yields at 1.67%, last week‘s decline didn‘t reach far before turning higher. Remembering stock market woes the first breach of 1.50% caused, stocks have coped well with the subsequent run up – while in the old days of retirees actually being able to live off interest rate income, a level of 4% would bring about trouble for S&P 500, now the level is probably just above 2%. Yes, that‘s how far our financialized economy has progressed – and I look for volatility to rise, and stocks to waver and likely enter a correction at such a bond market juncture. As always, I‘ll be keeping a close eye on the signs, emerging or not, as we approach that yield level.Gold isn‘t yet sensing the coming Fed intervention – similar to Europe or Australia, the central bank would have to take aim at the long end of the curve in earnest – yield curve control I raised mid-Feb already, as twist wouldn‘t be enough at that stage. Look for a full fledged financial repression and deflation standing no chance then – boon to all real assets, a time when gold would truly shine.For now though, Fed‘s credibility isn‘t being questioned and challenged in the markets. Bond yields are rising in an orderly fashion – if you can consider the 2021 run as orderly. I can‘t but I am not calling the shots at the Fed either so as to highlight the record 2021 TLT price extension below its longer-term moving averages. The unchallenged USD/JPY exchange rate shows that the yesterday mentioned yen carry trade is running hot:(…) making it a no brainer to borrow in declining currency while parking the proceeds elsewhere – powerful argument against deflation on our doorstep, by the way.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookStocks consolidated in a bullish fashion, and the stage is set for an upswing next. I see it as merely a question of time, and the early reaction to non-farm employment change, is neutral – look for the key Friday figure though.Credit MarketsHigh yield corporate bonds (HYG ETF) underperformed yesterday as both the investment grade corporate bonds and long-dated Treasuries rose. The HYG daily volume shows that this upswing isn‘t a done deal yet.Russell 2000 and Emerging MarketsWhile the 500-strong index is basing, both smallcaps (IWM ETF) and emerging markets (EEM ETF) attempt a turn higher. See how elevated $SPX remained vs. the two – it‘s clear the current upswing is a defensive one.Gold in the SpotlightGold miners weren‘t able to repeat their Monday‘s feat exactly, but aren‘t plunging faster than gold either. Sending inconclusive signals, is the takeaway – unless you step back and look at exactly the same weekly chart, which reveals miners comfortably outperforming the yellow metal. Be still ready for a coming test of my Mar 04 game plan, though.Gold with the overlaid copper to 10-year Treasury yield ratio (black line) shows that in the current (consolidation) phase of the commodities bull run, gold has lost its luster with yesterday‘s upswing. Again, how fast and from what level would it regain its footing, is the key question - $1,670 or not.Silver, Platinum and CopperSilver selling pressure unfortunately still dominates as the volume shows. White metal is in the straits much more than copper or platinum, which are merely going sideways (just as oil is).SummaryS&P 500 keeps consolidating Friday‘s gains without signs of upcoming, groundbreaking weakness. With volatility moving down again, the path of least resistance is still up – and tech isn‘t saying no.Gold is again in the proximity of the $1,670 support, and miners‘ performance will send as valuable clues just as before the Mar 08 bottom. Nothing convincing to draw conclusions either way at the moment.
Stock ATHs and Gold Double Bottom

Stock ATHs and Gold Double Bottom

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

Will Biden’s Infrastructure Plan Rebuild Gold?

Finance Press Release Finance Press Release 01.04.2021 17:23
Biden just announced an ambitious and expensive infrastructure plan. Will it rebuild gold?Yesterday (Mar. 31), President Joe Biden the big infrastructure plan , the second major legislative initiative after the $1.9 trillion coronavirus relief plan passed in early March. The proposal includes about $2.2 trillion in new spending over eight years, boosting government expenditures even further .Despite the name, the plan assumes that only a part would be spent on infrastructure. To be more specific, Biden wants to spend $600 billion on transportation infrastructure (such as bridges, roads, airports, etc.), and more than $300 billion on improving utilities infrastructure (drinking-water pipes, electric grids, broadband). He also proposes to put more than $300 billion into building and upgrading housing and schools, $400 billion to care for elderly and disabled Americans, and almost $600 billion in research and development infrastructure, manufacturing, and job training.That doesn’t sound bad at all (after all, infrastructure is critical), but there is a catch. The plan assumes that all the spending will be financed by tax hikes. Biden proposes to raise the U.S. corporate tax rate from the 21 percent set by Trump to 28 percent, as well as to eliminate all fossil fuel industry subsidies and loopholes. So, according to the proposal, the tax reforms will add about 0.5 percent of GDP in fiscal revenues, which are believed to fully pay for investments within the next 15 years.Implications for GoldWhat does Biden’s infrastructure plan mean for the U.S. economy? Well, I won’t argue that American infrastructure needs upgrading. There is a bipartisan agreement here. The problem is, however, that government spending programs are usually inefficient, and cost more than initially planned . Additionally, the plan seeks to give the government a significant role in new important areas, and to introduce anti-business and pro-labor unions regulations.So, generally speaking, the proposal stems from Biden’s progressive belief that government can and should be a primary driver for economic growth, which is just plain wrong. As both economic theory and empirics show, the private sector is inherently more efficient than the bureaucrats (you can ask people in the former communist countries whether it’s true). Such a revolution in U.S. economic policy will weaken the allocative efficiency and hamper the long-term pace of economic growth.Last but not least, the idea to raise taxes when the economy hasn’t fully recovered from the pandemic recession is controversial, at least. Higher taxes will weaken corporate America and redistribute resources from the private sector to the public sector, negatively affecting the economy in the long-run. As well, I don’t believe that the tax revenues will fully finance the plan, so the fiscal deficits will increase further, ballooning even more the already mammoth pile of federal debt (see the chart below).And how will Biden’s infrastructure plan affect the gold market? Well, in the long-run, higher government spending, public debts, inflation , and corporate taxes should hamper the pace of economic growth and weaken corporate America and Wall Street. Hence, the proposal could be positive for gold prices, at least from the fundamental point of view .However, Biden’s bold actions seem to be welcomed so far by the financial markets. This is because the fiscal stimulus – and the rollout of vaccination – is strengthening the risk appetite. There are also hopes that the “go big” approach will allow the American economy to recover more swiftly than previously expected and quicker than its European peers. These expectations could propel the bond yields further up (see the chart below), also strengthening the U.S. dollar, and creating additional downward pressure on the gold prices .Therefore, although the Fed will have to step in and ease its monetary policy if the interest rates rise too much, the bond yields have room to move higher. This upward trend could continue to put gold under pressure , unless the yellow metal finds a way to diverge from its relationship with interest rates, for example, by attracting more investors worried about inflation.If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
S&P 500 Fireworks and Gold Going Stronger

S&P 500 Fireworks and Gold Going Stronger

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

New S&P 500 Highs or Metals Rising?

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

On the Verge of Stocks Pullback

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

Navigating the Tidal Wave of Liquidity

Monica Kingsley Monica Kingsley 08.04.2021 15:50
S&P 500 moved marginally higher in spite of its short-term very extended position, powered by liquidity and almost defying the odds. Credit markets were hinting at deterioration, the yen carry trade I talked a week ago has run into a brick wall as viewed by the USD/JPY exchange rate reversal – but stocks didn‘t listen, and their market breadth indicators are actually quite healthy.We‘re still in the rare constellation I discussed two days ago – Treasury yield moves are exerting no real pressure either on value stocks or technology including heavyweights, which are picking up the tech upswing slack. Microrotations still pointing higher are the name of the game, on the wave of infrastructure bill expectations as well.Still, the risk-reward ratio for the bulls is at unsavory levels in the very short run even as the longer time frame perspectives remain really bright. Consider these points made yesterday:(…) we have seen quite a record number (around 95%) of stocks trading above their 200-day moving averages, which is similar to the setup right after the post-dotcom bubble bear market 2002/3 lows, or 1-2 years after the bull market run off the Mar 2009 lows. Hard to say which one is more hated, but I see the run from Mar 2020 generational low as the gold medal winner, especially given the denial accompanying it since.Gold kept its run above $1,740 intact and regardless of the daily weakness in the miners – should that one be repeated more consistently, it would become worrying for the bulls. Looking though again at the USD/JPY chart, I‘m increasingly optimistic that the currents working against the king of metals, have turned. That‘s because whenever yen, the currency perceived by the market place as a safe haven one, strengthens, gold tends to follow its cue – and that‘s where we are now. The precious metals run to the key $1,760s or even better above $1,775 is approaching, and has already sent my open gold position solidly into the black. The soft patch I cautioned against at the onset of yesterday‘s session, has materialized in the miners, and might be very well over by today‘s closing bell. Yes, I look for mining stocks to reverse yesterday‘s weakness even in the competition for money flows with the S&P 500 holding up gained ground.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookS&P 500 keeps hugging the upper border of Bollinger Bands, and the willingness to trade at these extended levels, has decreased as the volume shows. Long-term investors correctly perceive higher highs as coming, short-term ones view the entry point as unfavorable.Credit MarketsBond markets wavered yesterday – both corporate and Treasury ones. Yet, note the turn higher in both high yield corporate bonds and investment grade ones, defying TLT – this bodes well for the stock market upswing health.Focus on Technology and ValueTech (XLK ETF) reversed its Tuesday‘s retreat, and $NYFANG (lower black line) powered upwards while value stocks (upper black line) or Dow Jones Industrial Average didn‘t yield an inch. The advance is broad-based but tech heavyweights might take a moment in overcoming their mid-Mar highs.Inflation ExpectationsThe Treasury inflation protected securities to long-dated Treasuries (TIP:TLT) ratio appears ready to move upwards, and the rising yields are clearly doubting its recent dip.Gold in the SpotlightGold miners compared to gold, don‘t paint a daily picture of strength. Jumping to conclusions on account of the hanging man formation in gold, would be premature though.Zooming out, the weekly gold chart with overlaid copper to 10-year Treasury yield, paints a picture of (bullish) turnaround and decoupling. Gold has been clearly attempting to move higher lately, and that will reflect upon the precious metals complex positively as it undergoes its own rotations lifting gold, silver or miners at different stages and magnitudes.SummaryS&P 500 is likely to keep consolidating gained ground, and (shallow) bear raids wouldn‘t be unexpected here – in spite of the strong market breadth. We‘re witnessing VIX trading well below 20 for four sessions in a row while the put/call ratio has risen to the approximate midpoint of its usual range – the bull market is intact, and a breather wouldn‘t be surprising here.Miners moving higher again is the first step to power gold upwards sustainably again, but the shifting currency winds would help here as strengthening yen would facilitate beating the next major set of resistances above $1,760s.
Stocks are Heating Up

Stocks are Heating Up

Finance Press Release Finance Press Release 09.04.2021 15:40
In keeping with its historical performance, April has started off white-hot. We ended March, and Q1 for that matter, with more questions than answers.But April 2021 started with a blowout jobs report, and the indices haven't looked back since. Right now, the S&P 500 is at yet another record, the Dow is just about at a record, and we've seen a furious comeback for Big Tech and growth stocks.The sentiment is certainly better now than it was just a couple of weeks ago. However, I implore you to remember that every month in 2021 thus far has started off hot and saw a pullback/volatility occur in the second half of the month.Think about it. In January, we had the GameStop trade spooking investors. In February and March, we had surging bond yields, inflation fears, or Jay Powell comments that rubbed people the wrong way. These concerns won't just disappear because we want them to. If we could make things magically disappear, COVID would've been over yesterday.But, as I mentioned before, April historically is a strong month for stocks. According to Ryan Detrick , chief market strategist at LPL Financial, "Other than my Cincinnati Bengals breaking my heart, few things are more consistent than stocks higher in April."During April, the S&P 500 has gained in 14 of the past 15 years. April has also been the strongest month for stocks over the past 20 years.The market concerns, though, are still intact. We still have to worry about inflation, bond yields, and stocks peaking. According to Binky Chadha , Deutsche Bank's chief U.S. equity strategist, we could see a significant pullback between 6% and 10% over the next three months.Another thing I'm a bit concerned about is the $2 trillion infrastructure plan. While this is great for America's crumbling infrastructure, do we really need to spend any more trillions?Plus, how do you think this will be paid for? Hiking taxes- namely corporate taxes . Those gains that high growth stocks saw after Trump cut corporate taxes in 2017 could very well go away. While President Biden has indicated a willingness to negotiate his 28% corporate tax proposal, it's still a tax hike.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:We're hot right now.However, we could see more volatility and more muted gains than what we've come to know over the last year.April is historically strong, but please continue to monitor inflation, yields, and potential tax hikes. Be optimistic but realistic. A decline above ~20%, leading to a bear market, appears unlikely. Yet, we could eventually see a minor pullback by the summer, as Deutsche Bank said.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Russell 2000- Still Buyable?Figure 1- iShares Russell 2000 ETF (IWM)I proudly switched my call on the iShares Russell 2000 ETF (IWM) to a BUY on March 24. I kicked myself for not calling BUY on the Russell after seeing a minor downturn during the second half of February and swore I wouldn’t make that mistake again.We’re up to over 5% since then.The climate right now supports the Russell 2000. The current economic policy is tailor-made for small-caps. The best part, though? The Russell is still very buyable.The RSI is still hovering around 50. I also checked out the chart and noticed that almost every time the IWM touched or minorly declined below its 50-day moving average, it reversed.Excluding the recovery in April from last year’s crash, 5 out of the previous 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.Fast forward to now. The Russell 2000, despite its gains since tanking on March 23, remains right at about its 50-day moving average.Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for.According to the chart, we may have found double-bottom support too.Based on the chart and macro-level tailwinds, I feel that you can still BUY this index. In fact, it may be the most buyable of them all.For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
The Curious Staircase Rally in Stocks

The Curious Staircase Rally in Stocks

Monica Kingsley Monica Kingsley 09.04.2021 15:58
Another day of tiny S&P 500 gains defying gravity, boosted by overnight price action. Well, liquidity overpowering junk corporate bonds opening with a bullish gap only to partially close it. With some credit market hints at deterioration present, the yen carry trade is getting a new lease on life today, and that‘s generally bullish for risk-on assets such as stocks – but not really for precious metals.With all the Fed support, the Powell bid is in, affecting „traditional“ sectoral dynamics of rotation. Value is probably about to feel the heat if you look at the very long lower knot in financials (XLF ETF) yesterday. Yes, this interest rate sensitive sector still rose in the face of long-dated Treasuries‘ gains. Needless to say, technology loved that, and its heavyweights ($NYFANG) keep driving the sector up. It looks to be a question of time before Tesla (TSLA) joins – Square (SQ) already did.The key question is the rotation‘s degree – now that the yields appear ready to retreat still a little more (the 10-year yield appears targeting the low 1.50% figure if not declining further), which is what technology anticipates even though utilities and consumer staples have been dragging their feet a little lately. But value stocks aren‘t selling off in the least (yet?). Is the TINA still strongly in effect when those stock market segments that could have been expected under more stringent monetary policy to be sold, aren‘t no more? Rising tide lifting really all boats – in stocks.Gold has retreated from yesterday‘s almost $1,760 highs accompanied by continued miners‘ outperformance. That‘s likely on account of the yen getting under pressure today, even though gold defended the Mar 08 bottom in spite of $USDJPY peaking in the closing days of Mar. The yellow metal is still sensitively reacting to the nominal yield moves, which are serving as a tailwind – both in the short run and when you zoom out and add copper into the picture (final chart of yesterday‘s analysis).One of the key things that I am still waiting for before declaring the gold bottom to be absolutely in, is its run above the key $1,760s or even better above $1,775 level. Let‘s though first watch for the miners not running out of steam.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookS&P 500 keeps hugging the upper border of Bollinger Bands, yet the willingness to trade at these extended levels has slightly returned yesterday. Hard to time any bear raid in these circumstances really.Credit MarketsVery tight correlation indeed as the high yield corporate bonds to short-dated Treasuries (HYG:SHY) ratio keeps tracking the stock market moves. Not even the HYG volume picked up yesterday, making it impossible to call for a turnaround as investment grade corporate bonds (LQD ETF) keep rising in sympathy with TLT.Technology and ValueTech (XLK ETF) sprang to new highs on TLT erasing its Wednesday‘s losses while value again kept gained ground. Broad-based advance not pointing to much downside really unless $NYFANG turns in earnest.Gold and SilverGold turned strongly higher on the retreat in rising nominal yields (even as inflation expectations ticked lower yesterday) and the yen tailwind, but the volume behind the rally off the second imperfect bottom, is quite weak overall (concerning).Silver joined in yesterday‘s party, and both copper and platinum moved higher as well. Seeing the white metal not spiking yesterday is actually a positive sign of the precious metals upswing health, daily woes notwithstanding.Crude OilPrecious few directional signals in oil, yet higher prices are still favored by the oil index ($XOI). This consolidation is still relatively young, and not even a crash to roughly $52.50 would break the uptrend.SummaryS&P 500 keeps consolidating in a vulnerable and stretched position, yet offers no signs of an immediate retracement of a portion of prior gains. The current setup is unfavorable for short-term oriented (bullish leaning) traders who prefer higher signal clarity to the tight correlation we‘ve seen this week.After yesterday‘s fireworks, miners hold the key in today‘s session as the $1,760s are still a tough nut to crack – the precious metals‘ upswing health will be tested.
Will Upcoming Inflation Take Gold With It?

Will Upcoming Inflation Take Gold With It?

Finance Press Release Finance Press Release 09.04.2021 16:25
Inflation is coming. Gold may benefit from it, especially if inflation turns out to be more long-lasting than central bankers and markets believe.Brace yourselves, inflation is coming ! Importantly, not only grumblers such as myself are talking about rising prices right now, but even the Fed officials themselves admitted that inflation will jump this year. Indeed, in the latest dot plot , the Federal Open Market Committee (FOMC) expects that the PCE annual percent change will soar from 1.3 percent in December 2020 to 2.4 percent at the end of this year. Importantly, their projections increased significantly in the last three months when they amounted to 1.8 percent.And remember, we are talking here about the official inflation figures. The real inflationary pressure, which also affects asset prices, is much stronger. Furthermore, the pandemic changed the composition of consumption, as people are buying more goods and less services. And guess what, the prices of goods are rising more than the prices of services, so many people’s actual consumption baskets have become more expensive than official ones, implying that true inflation is higher than the officially reported one, as the IMF has recently admitted .Does this mean that the FOMC members have all suddenly become monetary hawks worried about higher inflation? Not at all. The Fed believes that inflation will be temporary, caused by the base effects (very low inflation readings in the second quarter of 2020) and by the reopening of the economy that will trigger higher consumer spending and some increases in prices.The U.S. central bank might be right. After all, there will be some temporary forces at play. There always are, but – oh, what a funny thing! – the Fed always cites “transient effects on inflation” when it’s increasing, but not when it’s declining. The problem is, however, that the markets don’t believe the U.S. central bank . Please take a look at the chart below, which displays inflation expectations over the next five and ten upcoming years.As you can see, both medium-term and long-term inflation expectations have significantly increased in the last few months. It means that investors don’t only expect a temporary rise in inflation – on the contrary, they forecast a more persistent increases in prices . Indeed, Mr. Market believes that inflation will be, on average, 2.5 percent in the next 5 years and almost 2.3 percent in the next 10 years, significantly above the Fed’s target of 2 percent.Of course, it might be the case that Mr. Market is wrong, and Mr. Powell is right. But what is disturbing is the Fed’s confidence – or, rather overconfidence – that it can contain inflation if it turns out to be something more than only a temporary phenomenon. Such a conceit led to stagflation in the 1970s. Gold shined at that time.Then, as today, the central bank focused more on the maximum employment than inflation, believing that it can always control the latter by raising the federal funds rate if necessary. But, as Robert J. Barro, from Harvard University, points out , “the problem is that hiking short-term rates will have little impact on inflation once high long-term expected inflation has taken root.”And the recent Fed’s actions, including the new monetary framework, according to which the U.S. central bank tries to overshoot its target for some time, may easily waste the reputational capital that was created by Paul Volcker and de-anchor inflation expectations.In other words, a negative shock can be accommodated by the central bank without long-lasting effects, as people understand that it’s a unique one-off event, after which everything will return to normalcy. But the Fed is far from normalizing its monetary policy . On the contrary, it has recently signaled that it wouldn’t raise interest rates preemptively to prevent inflation, as it could hamper the economic recovery. The risk here is that if people start to view exceptional as the new normal, their inflation expectations could shift, and become unanchored.To sum up, it might be the case that markets are overstating short-term inflation risks. But it’s also possible that politicians and central bankers understate the longer-term inflationary dangers , as Kenneth Rogoff, also from Harvard University, argues . After all, unlike in the aftermath of the Great Recession , when only the monetary base skyrocketed, the pace of growth of the broad money supply also soared this time – and it’s still increasing, as the chart below shows.In other words, while all the created liquidity after the global financial crisis of 2007-2009 flowed mainly into the financial markets, during the pandemic , it flowed into the real economy to a much larger extent, which can create more inflationary pressure.What’s more, the easy monetary policy is now accompanied by a very loose fiscal policy and the unprecedentedly large fiscal deficits , which could push the economy deeper into the debt trap . This could undermine the central-bank independence and prevent a timely normalization of interest rates , not to mention the weakening of globalization’s downside impact on inflation, caused partially by demographic factors and reshuffling in supply chains. Last but not least, the rising commodity prices and international transport costs, accompanied by the weakening U.S. dollar, may be harbingers of an approaching inflation monster.What does it all mean for the gold market? Well, the jump in inflation in 2021 should be positive for the yellow metal , which could gain as an inflation hedge . The downward pressure on the real interest rates should also be supportive for gold prices, although the rally in the bond yields may counteract this effect. But if Powell is right and inflation turns out to be only temporary, then gold may be hard hit, and we could see a goldilocks economy again (i.e., fast economic growth with low inflation). However, if markets are right, or if the long-term inflationary risks materialize, which even investors may understate, gold should shine.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 a 7-day no-obligation trial for all of our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
The SPY Is Nearing Resistance @ $410... Read On To Find Out What Is Next

The SPY Is Nearing Resistance @ $410... Read On To Find Out What Is Next

Chris Vermeulen Chris Vermeulen 09.04.2021 21:49
My shorter-term analysis for the markets continues to stay Bullish and suggests the US reflation trade, the strengthening of the US and the global economy, and recovery from the COVID-19 restrictions will likely prompt a moderately strong upside price trend leading into at least mid Q2:2021.  The recent strength of the US Dollar is helping to push capital into the US markets as foreign investors attempt to shift capital away from Emerging Market and currency weakness and the Treasury Yield rallies seem to have indicated a moderate warning related to global central banks attempting to front-run inflation concerns.SPY Targeting $410, then $425 or higherIf the US Dollar continues to strengthen and foreign capital continues to flow into the US stock market, then my research team and I believe a continued “melt-up” bullish price trend will continue, similar to what happened in 2018~2019.  As we can see on the chart below, the upside price target for the SPY is $410.15.  Once that level is reached, we believe a moderate sideways Bull Flag will set up and prompt another upside price rally targeting $425~$430.The rally in the US stock market will likely continue until key factors break down.  We don't know what those key factors are going to be, but we are watching our custom indexes and proprietary price modeling systems to identify if and when that breakdown takes place.  Currently, we don't see any real risk to a sudden downside price trend based on our research.  Of course, some sudden collapse in the global credit/banking industry, war, or some other unknown externality could easily disrupt the current balance of the markets.Right now, we are targeting the $410 level on the SPY and expect the next leg higher to target $425~430.  We believe the current market environment supports a continued $24~$28 Fibonacci Expansion range stepping higher as moderate pullback events take place after reaching subsequent upside targets.  This “upward stepping” price pattern will likely continue as the reflation trade pushes a continued “melt-up” price event. Remember, our research may change suddenly if needed and the best way to stay ahead of these market setups/trends is to get my daily BAN Trader Pro pre-market video that covers the charts of the major indexes, bonds, gold and silver, and other asset classes and sectors delivered top your inbox every morning. As with all things, we make decisions based on what we know right now and not based on what may or may not happen as a guess.  Our research and custom indicators suggest a strengthening US Dollar will pull foreign capital investments into US sectors/stocks and likely prompt another “melt-up” type of trend over the next few weeks and months.Don’t miss the opportunities to profit from the broad market sector rotations we expect this year, which will be an incredible year for traders of my Best Asset Now (BAN) strategy.  You can sign up now for my FREE webinar that teaches you how to find, enter, and profit from only those Best Assets Now that have the most strength and momentum. Staying ahead of sector trends is going to be key to success in volatile markets.Lastly, take some time this weekend to check out all the great speakers at the Wealth 365 Summit, the world's largest online trading and investment conference. Make sure you register today!Have a great weekend!
Stocks or Gold – Which Is in the Catbird Seat?

Stocks or Gold – Which Is in the Catbird Seat?

Monica Kingsley Monica Kingsley 12.04.2021 15:13
S&P 500 spurted higher after prior days of tiny gains. Still lining up the upper border of the Bollinger Bands on the daily chart, stocks keep defying gravity. But the corporate credit markets are sending a gentle warning sign as they failed to move higher in unison on Friday. Given the Fed support and liquidity injections talked on Friday:(…) the Powell bid is in, affecting „traditional“ sectoral dynamics of rotation. Value is probably about to feel the heat if you look at the very long lower knot in financials (XLF ETF) yesterday. Yes, this interest rate sensitive sector still rose in the face of long-dated Treasuries‘ gains. Needless to say, technology loved that, and its heavyweights ($NYFANG) keep driving the sector up. It looks to be a question of time before Tesla (TSLA) joins – Square (SQ) already did.The spanner in the works proved to be long-dated Treasuries as these gave up all intraday gains, and closed in a non-bullish fashion. The retreat in rising yields is running into headwinds, much sooner than the 10-year one could reach the low 1.50% figure at least. Value stocks and cyclicals such as financials appear calling it out, and both rose on Friday – and so did industrials and technology, all without tech heavyweights‘ help. Utilities and consumer staples went mostly sideways, disregarding the danger of yields about to rise again.The rotation simply isn‘t much there, and the TINA trade isn‘t letting much air to come out of the S&P 500 sectors that would be expected to sell off in a more relaxed monetary policy. Treasury holders keep demanding higher rates, disregarding the soft patch in inflation expectations since mid-Mar. And they‘re right in doing so, for the PPI missed badly on Friday – the development I had been anticipating since mid-Feb.Inflation in the pipeline is one of the reasons behind gold‘s resilience – and its continued rebound off the imperfect double bottom test.While the yellow metal‘s candlestick on Friday mirrors the USD/JPY one, the miners erased opening losses in a bullish show of outperformance. Given the continued consolidation in commodities keeping a partial lid on silver, that‘s bullish – gold appears sensing the upcoming pressure on the Fed to act once yields reach levels high enough to cause havoc across the markets, starting with stocks, just as I described on Mar 29.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsS&P 500 keeps pushing higher, into the upper border of Bollinger Bands that are now widening. Taking into account prior week‘s Easter-shortened trading, the weekly volume behind the upswing just in, is considerably lower than before – and that‘s not bullish.Market breadth indicators aren‘t arrayed in an overly bullish way. Both the advance-decline line and advance-decline volume have been lately unconvincing, but at least new highs new lows turned up. They‘re still below the early April peak, revealing that not as many stocks are pushing to make new highs.Credit MarketsVery tight correlation between the high yield corporate bonds to short-dated Treasuries (HYG:SHY) ratio and the stock market ended on Friday, and it remains to be seen whether that was a one day occurence only. Investment grade corporate bonds (LQD ETF) gave up half of intraday gains as long-dated Treasuries declined – the downward pressure appears returning into the debt markets.Technology and FinancialsTech (XLK ETF) turned from the sector most heavily extended to the south of its 50-day moving average, to the north of it. And given the hesitation a ka reversal in TLT reflecting upon $NYFANG, the sector‘s steep gains are likely to meet a headwind soon – and value stocks appear to be anticipating that with an upswing of their own, reflected in the financials (black line).Inflation ExpectationsInflation expectations as measured by the TIP:TLT ratio are basing, but bond yields refuse to budge, clearly agreeing that there is higher inflation coming. Gold and SilverGold miners are keeping the sector above water, and the daily gold downswing becomes much less credible as a result.Silver and copper daily downswings are in line with the gold one – there is no indication of a pocket of underperformance in commodities or elsewhere about to spill over and exert pressure on the precious metals sector.SummaryS&P 500 upswing is leaving the index in a vulnerable position, and especially the tech‘s reversal is leaving it in a perched place where no sector is however being really sold off. The current setup is still unfavorable for short-term oriented (bullish leaning) traders who prefer higher signal clarity to the tight correlation we‘ve seen this week, even more so given the corporate credit markets non-confirmation.Miners did their job on Friday, and the precious metals upswing hasn‘t lost its spark in spite of both metals closing down. The $1,760s are still a tough nut to crack, but I look for these levels to be challenge in the near future.
Gold & the USDX: Correlations

Intraday Market Analysis – Testing Daily Support

John Benjamin John Benjamin 13.04.2021 08:29
USDCHF retreats to major supportThe US dollar is treading water as traders await inflation data which would dictate the next movement.The greenback has fallen back to test the medium-term support (0.9210) from the daily chart after a three-month-long rally.An RSI divergence right above the key level is a sign that the correction has lost its momentum. Though a bullish breakout above 0.9280 will be needed to confirm a reversal.To the downside, a drop below the said support would trigger a new round of sell-off towards 0.9140.XAUUSD looks for supportGold is striving to consolidate its latest gains after a fall in US yields last week. After having established a solid support base at 1677, the price has rallied back to March’s high at 1757.A bullish breakout could lead to a sharp recovery as a result of triggering stop-losses and momentum buying.But for now, an overbought RSI has prompted profit-taking within the supply area. 1730 is the first line of defense as the metal pulls back to rebuild support.A deeper correction may lead to test 1710.US 30 rises along the trendlineThe Dow Jones flies high after Chairman Jerome Powell expressed his optimism in an interview that the US economy was set for a strong rebound.Following a breakout above its latest consolidation range (33250), the index has been grinding up along a rising trendline.The psychological level of 33400 would be the next target for the bulls. Though an overshot RSI may lead to a temporary pullback.The 30-hour moving average is the immediate support. Further down, 33510 along the trendline may see more buying interests.
Still a Bullish Fever in Stocks?

Still a Bullish Fever in Stocks?

Monica Kingsley Monica Kingsley 13.04.2021 15:46
S&P 500 went nowhere yesterday – just like the prior Monday, heavy buying into Friday‘s close met no follow-up the day after. After almost touching 16 to close the week, VIX peeked higher yesterday only to reverse back down. Nice try but if you look at the put/call ratio turning down simulatenously, the alarm bells are far from ringing.The S&P 500 rise of late isn‘t without its good share of non-confirmations though. The ones seen in Russell 2000 and emerging markets got a fresh company in the corporate credit markets. No denying that the stock market is in a strong uptrend, but it got a bit too stretched vs. its 50-day moving average – a consolidation in short order would be a healthy move, but the CPI readings above expectations don‘t favor one today.If you look at the put/call ratio again, its lows throughout Mar and Apr haven‘t been reaching the really exuberant levels of prior months, hinting at a less steep path of S&P 500 gains. And what about the volume print as stocks went about making new highs? Not encouraging either, and it‘s not that rising yields would be causing trouble:(…) The retreat in rising yields is running into headwinds, much sooner than the 10-year one could reach the low 1.50% figure at least. Value stocks and cyclicals such as financials appear calling it out, and both rose on Friday.And financials had a good day yesterday too. Technology welcomed the reprieve, and the heavyweights joined in increasingly more. Again though, more than a little stretched, these $NYFANG generals are rising while the troops (broader tech) are hesitating, which makes a down day / consolidation quite likely, especially should the TLT retreat again. As I wrote yesterday:(…) The rotation simply isn‘t much there, and the TINA trade isn‘t letting much air to come out of the S&P 500 sectors that would be expected to sell off in a more relaxed monetary policy. And that‘s probably what gold is sensing as it grew weak yesterday. The rising yields aren‘t yet at levels causing issue for the S&P 500, but the commodities‘ consolidation coupled with nominal yields about to rise, has been sending gold down yesterday – and miners confirmed that weakness by leading lower. This would likely be a daily occurence only unless and until copper gives in and slides – that‘s because of the inflation expectations having stabilized for now, but Treasury yields not really retreating. Yes, gold misses inflation uptick that would bring real rates down a little again – and is getting one in today‘s CPI as we speak.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookS&P 500 is no longer trading above the upper border of Bollinger Bands, but volume isn‘t picking yet up either. That makes a largely sideways consolidation the more likely scenario here.Credit MarketsBoth high yield corporate bonds (HYG ETF) and the investment grade ones (LQD ETF) declined yesterday while long-dated Treasuries went nowhere – but the bullish spirits in stocks didn‘t evaporate proportionately. This non-confirmation isn‘t too pressing at the moment.Technology and ValueTech (XLK ETF) stumbled yesterday, and it wasn‘t because of $NYFANG (black line) – yet value stocks didn‘t sell off either during these lately turning vapid rotations.Smallcaps and Emerging MarketsThe long underperformance in both indices vs. the S&P 500 goes on, and is actually a stronger watchout than the corporate credit markets at the moment. Inflation ExpectationsInflation expectations as measured by the TIP:TLT ratio are basing, but bond yields are aiming higher again, making higher inflation on the horizon a virtual certainty.Gold, Silver and MinersThe daily underperformance in miners is worrying – this daily leadership to the downside, where gold and silver declined proportionately to each other. Given that commodities didn‘t point to greater weakness, I consider yesterday‘s precious metals downswing as a bit exaggerated. SummaryS&P 500 still appears as entering a consolidation, but I‘m not looking for way too much downside. The Big Tech names would decide, and if you look at Tesla doing well yesterday, the S&P 500 correction would play out rather in time than in price.Gold depends upon the miners‘ path, and nominal yields trajectory. Once more inflation spills over into CPI readings, that would work to negate temporary weakness caused by real rates pressures, which is what we are getting.
Dovish Fed and Higher Inflation Equals Stronger Gold

Dovish Fed and Higher Inflation Equals Stronger Gold

Finance Press Release Finance Press Release 13.04.2021 16:47
The latest FOMC minutes were dovish, especially in light of the recent increase in inflation. That’s good for gold.Last week, The Federal Open Market Committee (FOMC) published minutes from its last meeting in March . They show that – in light of positive economic indicators – the members of the Committee turned out to be more optimistic about the U.S. economy since the previous meeting. But this is what we already know from the March economic projections.What is new and much more important is that Fed officials expressed the view that despite all the progress, the economic situation remained unsatisfactory with many indicators still far from the pre-pandemic level and the Fed’s long-term targets:Despite these positive indicators and an improved public health situation, participants agreed that the economy remained far from the Committee's longer-run goals and that the path ahead remained highly uncertain, with the pandemic continuing to pose considerable risks to the outlook.In consequence – and this is probably the key message from the recent minutes – the FOMC members reaffirmed that they are in no rush to taper the quantitative easing . Furthermore, the U.S. central bank will announce a change in the pace of asset purchases well in advance:Participants noted that it would likely be some time until substantial further progress toward the Committee's maximum-employment and price-stability goals would be realized and that, consistent with the Committee's outcome-based guidance, asset purchases would continue at least at the current pace until then. A number of participants highlighted the importance of the Committee clearly communicating its assessment of progress toward its longer-run goals well in advance of the time when it could be judged substantial enough to warrant a change in the pace of asset purchases. The timing of such communications would depend on the evolution of the economy and the pace of progress toward the Committee's goals.And the hike in the federal funds rate will happen only after the start of the normalization of the Fed’s balance sheet . So, given a lack of any communication in this regard, investors shouldn’t expect any increases in the interest rates for years .Last but not least, the Fed not only started to expect higher inflation – as a reminder, the FOMC participants expect 2.4 percent PCE inflation in 2021 – but it also “viewed the risks of upside inflationary pressures as having increased since the previous forecast”. However, the central bankers still believe that the increase in inflation this year will be transitory due to the base effects and supply disruptions:In the near term, the 12-month change in PCE prices was expected to move above 2 percent as the low inflation readings from the spring of last year drop out of the calculation. Most participants also pointed to supply constraints that could contribute to price increases for some goods in coming months as the economy continued to reopen. After the transitory effects of these factors fade, however, participants generally anticipated that annual inflation readings would edge down next year.This is a puzzling view in light of the fact that many participants “judged that the release of pent-up demand could boost consumption growth further as social distancing waned.” So, in some magical way, the release of pent-up demand could boost consumption, but not prices, and inflation could be increased only by supply factor, but not by demand factors.Implications for GoldWhat do the recent FOMC minutes imply for the yellow metal? Well, the increase in expected and actual inflation rates combined with the Fed’s dovish stance could create downward pressure on the real interest rates and the U.S. dollar, thus supporting gold prices . The yellow metal could also benefit from the elevated demand for inflation hedges in an environment of stronger upward pressure on prices.Indeed, the price of gold jumped shortly on Thursday (Apr. 8) above $1,750, as the chart below shows. This upward move was temporary, though, but that can change soon, as the inflation genie has popped out of the bottle.The Producer Price Index increased by one percent in March , twice more than in February, and significantly above the expectations of a rise of 0.4 percent. As well, the final demand index moved up 4.2 percent for the twelve months ended in March, the largest increase since September 2011. Meanwhile, the index for all commodities surged even more (12 percent!), in the fastest pace since the Great Recession , as the chart below shows. Importantly, the Consumer Price Index has also been rising recently (I will cover this report in the next edition of the Fundamental Gold Report).Of course, the rise in inflation may also increase the nominal bond yields, which could be negative for the gold market. However, the rally in the bond yields was mainly caused by the fact that investors priced in a more aggressive path of the federal funds rate than the FOMC members have indicated. But after the recent minutes it seems that these traders are starting to capitulate and will not fight the Fed anymore. This would be good news for the gold market.Indeed, the second quarter started much better for the yellow metal than the awful beginning of the year, and there are some reasons (dovish Fed, higher inflation, limited potential for further rally in the bond yields) for cautious optimism. But the key problem is that the Fed is still relatively hawkish compared to the Bank of Japan or the European Central Bank . Well, we will see, stay tuned!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
Many Sectors Are Primed For Another Breakout Rally - Are You?

Many Sectors Are Primed For Another Breakout Rally - Are You?

Chris Vermeulen Chris Vermeulen 13.04.2021 21:42
As we start moving into the Q1:2021 earnings season, we need to be aware of the risks associated with the volatility often associated with earnings data and unknowns.  Nonetheless, there are other factors that appear to be present in current trends which suggest earnings may prompt a moderately strong upside breakout rally – again.One key factor is that the US markets are already starting to price in forwarding expectations related to a reflation economy – a post-COVID acceleration in activity, consumer participation, and manufacturing.  Secondarily, we must also consider the continued stimulus efforts, easy monetary policy from the US Fed, and the continued trending related to the 12+ month long COVID-19 recovery rally. In some ways, any damage to the economy related to COVID-19 may have already happened well over 6+ months ago.  Certainly, there are other issues we are still dealing with and recovering from, but the strength of the US economy since May/June of 2020 has been incredible.  When we combine the strength of the economic recovery with the extended support provided by the US Fed and US government stimulus/policy efforts, we are left with only one conclusion:  the markets will likely continue to rally until something stops this trend.Just this week, after stronger inflation data posted last week, and as earnings data starts to hit the wires, we are seeing some early signs that the US major indexes are likely to continue to trend higher – even while faced with odd earnings data.  If this continues, we may see the US major indexes, and various ETF sectors, continue to rally throughout most of April – if not longer.Come watch over 60 investment and trading LEGENDS share their secrets with you for free – click here for your FREE REGISTRATION!Today, Aphria (APHA), announced a third-quarter “miss” on sales, and net operating loss fell more than 14%.  This tugged many Cannabis-related stocks lower and pulled the Alternative Harvest ETF (MJ) lower by over 4%.  Still, the Transportation Index, Financial sector ETF (XLF), and S&P500 SPDR ETF (SPY) rallied to new all-time highs.This suggests the market is discounting certain sector components as “struggling” within a broadly appreciating market trend.  In this environment, even those symbols which perform poorly won't disrupt the Bullish strength of the general markets.  Because of this, we believe the overall trend bias, which is Bullish, will continue to push most of the market higher over the next few days/weeks... at least until something happens to break this trend or when investors suddenly shift away from this trend.SPY Rally May Be Far From Over At This StageLet's start by reviewing this SPY Daily chart below (S&P500 SPDR ETF).  As you can see, the recent rally has already moved above the GREEN 100% Fibonacci Measured Move target level near $410.  Any continued rally from this level would suggest an upside price extension beyond the 100% Fibonacci Measured Move level is initiating.  This type of trending does happen and can often prompt a higher target level (possibly 200% or higher) above our initial targets.What is interesting in our review of these charts is the SPY may be rallying above recent price range targets, using the Fibonacci Measured Move technique, but other sectors appear to really have quite a bit of room to run.Transportation Index Continues To Suggest Stronger US RecoveryThis Transportation Index Daily Chart, TRAN, suggests a target level near $15,627 so it is reasonable to assume the Transportation Index may continue to rally more than 4% higher from current levels.  Ideally, if this were to happen, it would suggest the broader economic recovery is strengthening and we may expect to see the US major indexes continue to rally higher as well.At this time, when economic data and Q1:2021 earnings are streaming into the news wires, we usually expect some extended volatility in the markets.  The VIX may rally back above 19 to 24 over time if the markets reflect the varied earnings outcomes we expect.  Yet, we believe the overall bias of the markets at this stage of the trend is solidly Bullish.Financial Sector ETF Ready To Rally Above $37The Financial sector ETF (XLF), as seen in the following chart, is poised to break higher after a dramatic recovery in price after December 2020.  The rally from $29 to over $35 represents a solid +20% advance and the recent resistance level, near $35.30, is a key level to watch as this sector continues to trend.  Once that resistance level is breached, we believe a continued rally attempt will target $37, then $39.40.The expected recovery in the US economy will prompt more consumer spending and the use of credit.  Over the past 8+ months, US consumers have worked to bring down their credit levels and saved more money because of the change in how we addressed COVID work-styles and lack of travel (and extra money from the Stimulus payments).  That may not change right away, but eventually, consumers will start to engage in the economy as travel starts to recover and summer activities start to take place.  This suggests spending, travel, vacationing, eating out and other activities will prompt a new wave of economic activity within the Financial Sector.The US markets are uniquely poised to further upside price gains because the US has such a dynamic core economy.  Our base of consumers is, generally, working in jobs, saving more, and more capable of traveling within the US to engage in summer activities.  Because of this, we believe the continued recovery of the US economy will prompt another wave of higher prices throughout the Q1:2021 earnings season.  We believe a number of solid earnings and expectations will support the market and future expectations will support a continued moderate price rally in certain sectors.The strongest sectors are going to continue to be the best performers over time.  Being able to identify and trade these sectors is key to being able to efficiently target profits.  You can learn more about the BAN strategy and how to identify and trade better sector setups by registering for our FREE webinar here.  We've built this technology to help us identify the strongest and best trade setups in any market sector.  Every day, we deliver these setups to our subscribers along with the BAN Trader Pro system trades.  You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.For those who believe in the power of trading on 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 with daily market reports, research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my premium subscribers.Happy Trading!
New Day, New ATHs with Gold in the Wings

New Day, New ATHs with Gold in the Wings

Monica Kingsley Monica Kingsley 14.04.2021 16:07
S&P 500 went up yet again yesterday, and the corporate credit markets‘ non-confirmation quite resolved itself. While the same can‘t be said about smallcaps or emerging markets in the least, S&P 500 doesn‘t care, and keeps up the staircase rally without real corrections to speak of.Not even intraday ones, unless you count the sharp and brief premarket one yesterday before the CPI figures came out. That‘s the result of the sea of liquidity in practice, and the avalanche of stimuli. The 1.50% yield scare on 10-year Treasuries is long forgotten, and technology welcomes every stabilization, every retreat from even quite higher levels, and value stocks barely budge. No real rotation to speak of and see here, move along.Such were my recent observations:(…) No denying that the stock market is in a strong uptrend, but it got a bit too stretched vs. its 50-day moving average – a consolidation in short order would be a healthy move, but the CPI readings above expectations don‘t favor one today.Talking gold prospects early yesterday:(…) And that‘s probably what gold is sensing as it grew weak yesterday. The rising yields aren‘t yet at levels causing issue for the S&P 500, but the commodities‘ consolidation coupled with nominal yields about to rise, has been sending gold down yesterday – and miners confirmed that weakness by leading lower. This would likely be a daily occurence only unless and until copper gives in and slides – that‘s because of the inflation expectations having stabilized for now, but Treasury yields not really retreating. Yes, gold misses inflation uptick that would bring real rates down a little again – and is getting one in today‘s CPI as we speak.CPI inflation is hitting in the moment, and its pressure would get worse in the coming readings. Yet the market isn‘t alarmed now as evidenced by the inflation expectations not running hot – the Fed quite successfully sold the transitory story, it seems. Unless you look at lumber, steel or similar, of course. None of the commodities have really corrected, and the copper performance bodes well for the precious metals too.The stalwart performance in the miners goes on after a daily pause as gold gathers strength and silver outperformed yesterday. Silver miners and gold juniors are pulling ahead reliably as well, not just gold seniors.The run on $1,760 awaits.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookS&P 500 is no longer trading above the upper border of Bollinger Bands, the price action remains bullish, and volume is ever so slowly picking up (sending weak early signs thereof), but the bulls better watch out for a catalyst forcing a down day once in a while again.Credit MarketsBoth high yield corporate bonds (HYG ETF) and the investment grade ones (LQD ETF) turned around yesterday, and so did long-dated Treasuries – and that supports the bullish spirits in stocks. It was indeed right to view the prior non-confirmation as not too pressing at the moment.Technology and ValueTech (XLK ETF) rose strongly yesterday, and so did the kingmaker $NYFANG (lower black line) and Tesla that I called out yesterday. But value stocks didn‘t sell off – a powerful testament to the TINA trades driving no real rotations to speak of as nothing gets really sold off just on its own.Gold and MinersGold isn‘t in a decline mode anymore, and appears picking up strength so as to take on the $1,760s. Volume is returning, and the current reprieve in rising yields is welcome.Miners returned to the limelight, and it‘s my view they would lead gold by breaking above their recent highs convincingly, as the tide in the metals has turned. Time and desirably a catalyst of such move, is all that is needed. Geopolitics (to the short-term rescue) or more unavoidable inflation data bringing down real rates, that‘s I am looking for next.Silver and MinersSee the gold and silver miners trading in lockstep, remember gold juniors as well, and you get this bullish picture where the whole precious metals sector is slowly coming back to the limelight. In case of silver, the return in volume is boding well for the days ahead – all without the classic signs of bearish isolated silver outperformance. SummaryS&P 500 and the still elusive consolidation – the Fed speakers won‘t likely trigger one today, but bulls, watch out for some daily downside with little to no warning in your plans, after all.Gold and miners‘ paths are aligned, and nominal yields trajectory is boding well for the days ahead when patience is still needed before the nearest resistances in both assets are taken out with conviction.
Stocks, Gold and Commodities Meet the Fed

Stocks, Gold and Commodities Meet the Fed

Monica Kingsley Monica Kingsley 15.04.2021 15:56
S&P 500 in the red – unprecedented. Don‘t pin your hopes too high for a (sharp) correction though. Yes, this time stocks listened to the weakening corporate credit markets, and the daily retreat in long-dated Treasuries inspired some profit taking in tech. Quite some run there as yields stabilized, which has turned XLK from very stretched to the downside of its 50-day moving average, to the upside extreme. Tesla also followed suit but I doubt this is a true reversal of tech fortunes.As stated yesterday:(…) That‘s the result of the sea of liquidity in practice, and the avalanche of stimuli. The 1.50% yield scare on 10-year Treasuries is long forgotten, and technology welcomes every stabilization, every retreat from even quite higher levels, and value stocks barely budge. No real rotation to speak of and see here, move along.CPI inflation is hitting in the moment, and its pressure would get worse in the coming readings. Yet the market isn‘t alarmed now as evidenced by the inflation expectations not running hot – the Fed quite successfully sold the transitory story, it seems. Unless you look at lumber, steel or similar, of course. None of the commodities have really corrected, and the copper performance bodes well for the precious metals too.And the Fed mightily confirmed the message yesterday, which is what commodities loved. Inflation has a free reign, all it has to do is to take advantage of it. And if I look at rising oil filtering into higher gasoline and food prices, the real inflation will keep on biting (even though black gold is excluded from CPI calculations).I don‘t expect these recent observations to change much, especially since we got the daily breather yesterday – but 3, let alone 2 red candles in a row? I haven‘t seen that in stocks for quite a while:(…) No denying that the stock market is in a strong uptrend, but it got a bit too stretched vs. its 50-day moving average – a consolidation in short order would be a healthy move, but the CPI readings above expectations don‘t favor one [on Tuesday].Precious metals didn‘t swing higher immediately, but I expect them to take the commodities‘ cue next. When Powell says the Fed isn‘t thinking about selling bonds back into the market, and that he learned a lesson (hello, late 2018), real rates aren‘t probably rising much any time soon. It appears to me a question of time before inflation expectations squeeze the nominal yields some more, which is what gold would love.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookDaily downswing on marginally higher volume that doesn‘t shift the perspective towards a corrective territory in the least. The correct question instead is probably whether the S&P 500 upswing reasserts itself the next day or the day after.Credit MarketsBoth high yield corporate bonds (HYG ETF) and the investment grade ones (LQD ETF) reversed to the downside yesterday, and long-dated Treasuries didn‘t have a good day either. The reversals are though not to be trusted as I look for the upswing in both to continue.Technology and ValueTech (XLK ETF) driven by $NYFANG (lower black line) and then also Tesla (TSLA), were the key underperformers yesterday. Value stocks kept moving higher, and higher SPX prices are more likely next in this no real rotations to speak of environment, courtesy of all the extra liquidity.Inflation ExpectationsYields are not rising, but aren‘t yet retreating either. Have the rising inflation expectations been banished? I‘m not convinced even though they aren‘t running hotter in the wake of PPI and CPI figures, which are bound to get worse next – if copper and oil are to be trusted (they are). Remember that this is the Fed‘s stated mission for now – to let inflation run to make up for prior periods of its lesser prominence. Gold in the LimelightNominal yields are gradually taking the pressure off the yellow metal as the miners keep outperforming gold. Seniors (GDX ETF) would lead gold by breaking above their recent highs convincingly (solidly above $35 on rising volume and bullish candle shape), as the tide in the metals has turned. The unavoidable inflation data bringing down real rates would do the trick.Silver, Copper and OilWhile silver recovered intraday losses, both copper and oil surged on the Fed reaffirmations. The table is set for miners and both precious metals to move higher next. outperformance.SummaryWhat a fast S&P 500 correction, how did you like it? The bulls have yet again reversed the setback in today‘s premarket session, and the slow grind higher keeps going on.Gold and miners are likely to take a cue from the surging commodities, and grow emboldened by the nominal yields retreat. Patience is still needed before the nearest resistances in both assets are taken out with conviction.
Inflation Soared in March. Will Gold Jump Too?

Inflation Soared in March. Will Gold Jump Too?

Finance Press Release Finance Press Release 15.04.2021 17:42
Inflation accelerated its pace in March, which should support gold when economic confidence softens.The U.S. CPI inflation rate rose 0.6% in March , following a 0.4% increase in February. It was the biggest monthly jump since August 2012. The move was larger than most analysts expected. However, I’m not surprised at all, as after February’s CPI report, I wrote that inflation “may rise further in the coming months”.The acceleration in the inflation rate was driven mainly by a 9.1% spike in the gasoline prices over the past year (in March 2020, the price of oil plunged). But the core CPI monthly rate, that excludes energy and food prices, also accelerated to 0.3% in March, from 0.1% in February.So, inflation has finally reared its ugly head, which is even more clearly seen on an annual basis. The overall CPI soared 2.6% over the last 12 months ending in March, following a 1.7% increase in the preceding month. Meanwhile, the core CPI jumped 1.6%, following a 1.3% rise in February. Hence, as the chart below shows, inflation has not only increased significantly since the bottom in May 2020, but it has also substantially surpassed the Fed’s target.What’s important is that the recent jump in inflation is not a one-off event. We can expect that high inflation will stay with us for some time, or it can accelerate further next month, given the fact that oil prices plunged deeply in April 2020 (some oil futures even fell into negative territory!). So, the next CPI reading will have to factor in a quadrupling of oil prices over the year.Implications for GoldWhat does it all mean for the price of gold? Well, higher inflation should support gold , which is perceived as an inflation hedge . Furthermore, higher inflation should decrease or at least soften the rise in the real interest rates , further supporting the price of the yellow metal.As the chart below shows, gold’s immediate response was positive, yet rather limited, with the price of the yellow metal increasing to almost $1,748 on Tuesday (Apr.13). After all, the increase in inflation was widely expected given the base effects and the latest Fed’s economic projections. So, no big surprises here.However, I believe that inflation hasn’t said its last word yet . It could be just the beginning. You see, the current mainstream view is that inflation is no longer a problem in the contemporary economy, and that the 1970s-like stagflation will never happen again. Furthermore, the Fed believes that it would be able to contain inflation if it turns out to be really problematic. As Powell said in his recent interview ,The economy has changed. And what we saw in the last couple of cycles is that inflation never really moved up as unemployment went down. We had 3.5% unemployment, which is a 50-year low for much of the last two years before the pandemic. And inflation didn’t really react much. That means that we can afford to wait to see actual inflation appear before we raise interest rates.The Fed Chair is right. The economy has changed. But the economic laws haven’t. So, the combination of the recent surge in the broad money supply , the supply disruptions, demographic shifts, base effects, and the realization of the pent-up demand, may still lead to inflation. And remember that the Fed’s new monetary regime is more tolerant to upward price pressure, which increases the odds of inflation getting out of control.In other words, I believe that the risk of stagflation is underestimated. With increasing vaccination, unlocking the economy, and expectations of a vigorous recovery, economic confidence is high. So, investors should focus more on economic growth than on inflation. However, I bet that when this post-pandemic euphoria wanes, there will be a deterioration in economic confidence, caused either by more persistent and higher inflation than expected, or higher bond yields , or problems with the private and public debts . When this happens, gold should rally again.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
Earnings Season’s Hot Start

Earnings Season’s Hot Start

Finance Press Release Finance Press Release 16.04.2021 15:42
“Other than my Cincinnati Bengals breaking my heart, few things are more consistent than stocks higher in April.”As a stock nerd and NFL fan, I love this quote from Ryan Detrick , the chief market strategist at LPL Financial.Historically in April, the S&P 500 has seen gains in 14 of the past 15 years. April has also been the strongest month for stocks over the past 20 years.April 2021 has been no exception. Although March, and Q1, for that matter, ended with more questions than answers, this month has been nothing but white-hot.The month kicked off with a blowout jobs report. It then continued with two consecutive weeks of jobless claims crushing estimates, retail sales coming in almost ⅓ higher than projected, and bank earnings blowing past forecasts. The Dow Jones and S&P 500 seemingly hit fresh record-highs every other day, and despite complications with JnJ’s one-dose vaccine, all signs point towards our life returning to normal by this summer.While optimism is high right now, I implore you to remain cautious. I’m really not sure how much higher the Dow and S&P can go without pulling back somewhat. Not to mention, it still has not been smooth sailing for Cathie Wood stocks or SPACs for the last two months either. This rotation into recovery names is very real.Remember that every month in 2021 thus far has started off hot and saw a pullback and volatility occur by the second half of the month.We are now officially in the latter half of April. Although, as I said, April is historically a strong performing month, think about this. By the second half of January, we had Reddit trades spooking investors. In February and March, we had surging bond yields, inflation fears, or Jay Powell comments that rubbed people the wrong way. These concerns won’t just disappear because we want them to. If we could make things magically disappear, COVID would’ve been over yesterday.According to Binky Chadha , Deutsche Bank’s chief U.S. equity strategist, we could see a significant pullback between 6% and 10% over the next three months because of potentially full valuations and inflation fears. Even if this $2 trillion infrastructure plan doesn’t pass in full, do we really need to spend any more trillions with an economy starting to turn red hot?Plus, how do you think this will be paid for? Hiking taxes- namely corporate taxes . Those gains that high growth stocks saw after Trump cut corporate taxes in 2017 could very well go away. While President Biden has indicated a willingness to negotiate his 28% corporate tax proposal, it’s still a tax hike.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:We’re hot right now.However, we could see more volatility and more muted gains than what we’ve come to know over the last year.April is historically strong, but please monitor overvaluation, inflation, bond yields, and potential tax hikes. Be optimistic but realistic. A decline above ~20%, leading to a bear market, appears unlikely. Yet, we could eventually see a minor pullback by the summer, as Deutsche Bank said.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. The Dow Jones- How Much Higher Could We Go?Figure 1- Dow Jones Industrial Average $INDUThe Dow Jones remains red hot in 2021. Strong bank earnings, a recovering economy, and the potential for further infrastructure spending have sent the index to record highs in what seems to be every other day. Unfortunately, we are nowhere close to buyable any longer and are firmly overbought with an RSI over 72.For the longest time, I’ve said to HOLD the Dow and let the gains ride. Now, I think it’s an excellent time to trim and take profits. Many analysts believe the index could end the year at 35,000 or higher, and the wheels are still in motion for that to happen. The problem, though? We’re above 34,000, and we’re only in mid-April.You could do a heck of a lot better for a buyable entry point.Having Dow exposure is valuable. The index has many strong recovery cyclical plays that should benefit from what appears to be an economic recovery and reopening going even better than expected. The Dow could also be quite beneficial as a hedge against volatile growth stocks and SPACs. You won’t see bond yields spooking this index as much.But at this level, it’s probably better to SELL and consider trimming profits.For an ETF that aims to correlate with the Dow’s performance, the SPDR Dow Jones ETF (DIA) is a great option.For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Gold Fireworks Doubt the Official Inflation Story

Gold Fireworks Doubt the Official Inflation Story

Monica Kingsley Monica Kingsley 16.04.2021 16:09
The S&P 500 red candle and then some – erased in a day, that‘s what you get with the Fed always having your back. The staircase climb certainly looks like continuing without any real breather. Whatever steep ascent you compare it to (Jun or early Sep 2020), this one is different in that it doesn‘t offer but token corrections. Not that it would be reasonable to expect a steep downswing given the tide of liquidity, but even sideways trading has become rarer than it used to be.With the VIX still below 17 and the put/call ratio in the middle of its slowly but surely less complacent range, the path of least resistance is higher – the signs are still aligned behind the upswing to go on: (…) Don‘t pin your hopes too high for a (sharp) correction though. Yes, [on Wednesday] stocks listened to the weakening corporate credit markets, and the daily retreat in long-dated Treasuries inspired some profit taking in tech. Quite some run there as yields stabilized, which has turned XLK from very stretched to the downside of its 50-day moving average, to the upside extreme. Tesla also followed suit but I doubt this is a true reversal of tech fortunes.Just at yesterday‘s moves – technology surged higher without too much help from the behemoths, and value stocks surged. Even financials ignored the sharp retreat in yields. Yes, that‘s the result of retails sales outdoing expectations and unemployment claims dropping sharply – the economic recovery is doing fine, manufacturing expands, and inflation doesn‘t yet bite. We‘re still in the reflationary stage where economic growth is higher than the rate of inflation or its expectations.Gold loved the TLT upswing and Powell‘s assurances about not selling bonds back into the market in rememberance of eating a humble pie after the Dec 2018 hissy fit in the stock market (isn‘t this the third mandate actually, the cynics might ask). I called for the sharp gains across the precious metals board sending my open position(s) even more into the black – both on Wednesday:(…) CPI inflation is hitting in the moment, and its pressure would get worse in the coming readings. Yet the market isn‘t alarmed now as evidenced by the inflation expectations not running hot – the Fed quite successfully sold the transitory story, it seems. Unless you look at lumber, steel or similar, of course. None of the commodities have really corrected, and the copper performance bodes well for the precious metals too.and Thursday:(…) Precious metals didn‘t swing higher immediately, but I expect them to take the commodities‘ cue next. When Powell says the Fed isn‘t thinking about selling bonds back into the market, and that he learned a lesson (hello, late 2018), real rates aren‘t probably rising much any time soon. It appears to me a question of time before inflation expectations squeeze the nominal yields some more, which is what gold would love.The stalwart performance in the miners goes on after a daily pause as gold gathers strength and silver outperformed yesterday. Silver miners and gold juniors are pulling ahead reliably as well, not just gold seniors.The run on $1,760 awaits.This is just the beginning, and as I had been repeatedly stating on Twitter:(…) The GDX closing convincingly above $35 would usher in great gold and silver moves.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookNew ATHs, again and this time on rising volume – the momentum still remains with the bulls even though the daily indicators are waning in strength, and as said earlier, $NYFANG causes a few short-term wrinkles.Credit MarketsThe high yield corporate bonds to short-dated Treasuries (HYG:SHY) ratio performance got better aligned with the S&P 500 one, now that nominal yields have retreated.Smallcaps and Emerging MarketsReflecting the turn in the Treasury markets, both the Russell 2000 (IWM ETF) and emerging markets (EEM ETF) clearly turned higher, confirming the direction the S&P 500 has been on practically non-stop since late Mar.Inflation ExpectationsInflation expectations are going down, that‘s the conventional wisdom – and nominal yields duly follow. But the RINF ETF isn‘t buying the TIPS message all that much, proving my yesterday‘s point:(...) Have the rising inflation expectations been banished? I‘m not convinced even though they aren‘t running hotter in the wake of PPI and CPI figures, which are bound to get worse next – if copper and oil are to be trusted (they are). Remember that this is the Fed‘s stated mission for now – to let inflation run to make up for prior periods of its lesser prominence. Gold in the LimelightGold is surging higher ahead of the nominal yields retreat, as the bond vigilantes failed yet again to show up. In the meantime, the inflationary pressures keep building up...Gold, Silver and MinersAs stated the day before, seniors (GDX ETF) would lead gold by breaking above their recent highs convincingly (solidly above $35 on rising volume and bullish candle shape), as the tide in the metals has turned. The unavoidable inflation data bringing down real rates would do the trick, which is exactly what happened. Silver scored strong gains as well, yet didn‘t visibly outperform the rest of the crowd. I look for the much awaited precious metals upleg to go on, and considerably increase open profits.SummaryThe daily S&P 500 downswing is history, and the relentless push higher (best to be compared with a rising tide), goes on.Gold and miners took a cue from the surging commodities, and nominal yields retreat. Patience has been rewarded, and a close above $1,775, is what I am looking for next as the gold bottom is in.
Will Rates Rally Further, Pushing Gold Down?

Will Rates Rally Further, Pushing Gold Down?

Finance Press Release Finance Press Release 16.04.2021 16:54
The recent rally in the bond yields pushed gold prices down, but this trend won’t continue forever, as the Fed will likely be forced to step in.In March, we saw a continuation of the rally in bond yields that started in February. As the chart below shows, the 10-year real interest rates have soared from -1.06 on February 10 to -0.66 percent on March 23.What is clear from the chart is the strong correlation between the 10-year TIPS yields and the gold prices. As a consequence, the rising bond yields made gold struggle. However, in March, the real interest rates were much more choppy compared to February, when they surged decisively. It may signal a lack of fuel for the further rally, at least for a while.Now, what is important here is that despite the recent jump in the real yields, they remain extremely low from the historical point of view . And they remain well below zero! This is good news for the gold market, as the yellow metal shines the most when real interest rates are negative.Of course, the direction of change is also very important, not just the absolute level. So, the question is, will the rates increase further? Well, it’s unfortunately possible, as the improving economic outlook and risk appetite are encouraging investors to buy stocks rather than bonds.On the other hand, the rising inflation expectations suggest that real yields may struggle to increase further , or they actually may go down. As the chart below shows, the market expectations of inflation in the next 10 years, derived from the Treasuries, have risen from 0.50 at the bottom in March 2020 to 2.31 on March 24, 2021.Given the increase that has already taken place, the further rise may be limited. But the broad money supply is still rising at an accelerating pace, and investors still don’t believe that the Fed will not hike the federal funds rate to combat rising inflation. They don’t buy the new monetary framework and all the talking about letting inflation overshoot the Fed’s target. Of course, the promise to be irresponsible in the future is not very credible, but investors shouldn’t underestimate the recklessness of central bankers .You see, we live in an era of weak policymakers unable to make serious commitments, or take unpopular actions, contrary to the needs of Wall Street and the government. For example, Janet Yellen , as a Treasury Secretary, should stress fiscal discipline – instead, she praised the “go big” approach of the new administration. Congress has already passed the $1.9 trillion fiscal stimulus and the next additional spending is coming . The legislative proposal of new government expenditures on infrastructure and other priorities (such as climate change and the labor market) could collectively cost more than $3 trillion.It’s true that the additional government spending and the necessary borrowing could push up the yields (this is an important downward risk for gold). But rising interest rates could hamper the economic recovery and make government financing more costly, further ballooning already mammoth fiscal deficits . So, the Fed will likely have to step in and expand its quantitative easing program or introduce other measures, such as the yield curve control, to curb the long-term interest rates. It will weaken the dollar, thus supporting gold prices.As a reminder, the Bank of Japan has started to target the yield on 10-year government bonds at around zero percent in 2016, as it decided that the rapid monetary base expansion via large-scale asset purchases was unsustainable. More recently, the European Central Bank has announced in March the acceleration in the pace of its QE in a response to the rally in bond yields.So, do you really think that the Fed won’t follow suit? That Powell will not help Yellen, his former boss from the Fed? The sharp increase in yields would be inconsistent with the Fed’s dovish policy and the overall debt-driven economic growth. Hence, if the interest rates increase too much, be sure that the Fed will do something, providing a long-awaited support for the price of gold.What is “too much”? Not so much, at least not in the debt-trap we live in. Some analysts believe that this could occur if nominal 10-year Treasury yields rise over 2 percent, not too far from the current levels, as one can see in the chart below.Should we be surprised, given the bond bubble created by the central banks? They have kept the bond yields artificially depressed for years, so even a modest normalization – perfectly justified by the expectations of economic recovery and rising inflation – could collapse the house of cards and cause a financial crisis . Hence, although markets have become more optimistic recently, I’m afraid that bears and black swans haven’t said the last word yet. And neither has gold.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get a 7-day no-obligation trial for all of our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
Are Metals & Miners Starting A New Longer-Term Bullish Trend?

Are Metals & Miners Starting A New Longer-Term Bullish Trend?

Chris Vermeulen Chris Vermeulen 19.04.2021 03:53
Almost in stealth mode, precious metals have begun to bottom and start a new upside price trend while the US stock market focused on the FOMC meeting a few weeks back and current economic data.  Gold, Silver, and many of the Miner ETFs recently started a moderately strong push higher – almost completely behind the scenes of the hype in the markets regarding IPOs and Bitcoin's new recent highs.All the Gold traders know that when Gold starts a new leg higher, it could mean inflation fears are being amplified in the global markets and/or fear is starting to creep back into the markets.  After the recent rally in the US major indexes and as we plow through Q1:2021 earnings, it makes sense that some fear and inflation concerns are starting to take precedence over other concerns.  Will the markets just continue to push higher and higher? Or are the market nearing some type of intermediate-term peak after rallying from November 2020? Only time will tell...The recent move in Gold and Silver prices suggests traders and investors are starting to act more aggressively to hedge against downside market risks.  My research team and I believe these upside trends may confirm an upside breakout trend in Precious Metals and Miners within 2 to 4+ weeks. You may find some of our earlier research articles related to metals, including our April 15th price targets for Gold, Silver, and Platinum, and our research from March 26th where we explore an impending miners breakout rally.Custom Metals Index Shows Breakout Starting – 433 Level Is ConfirmationLet's start by reviewing our Custom Metals Index Weekly chart, below.  The continued downward price slide from the early August 2020 peak has extended more than 8 months. Recent lows also align with the peak levels just before the COVID-19 market collapse (February 2020).  Our research suggests this level will act as a strong support level and may prompt a new bullish price leg in Precious Metals and Miners if we continue to see confirmation of this uptrend in the future. Confirmation for our research team would be a strong close above 433 on our Custom Metals Index chart – closing above the 2021 Yearly highs.We urge readers to pay close attention to the RED price channels on this Custom Metals Index chart.  These historic price channels may become very relevant in the near future.  A strong upside price breakout in precious metals may prompt a rally that extends aggressively higher – attempting to reenter this current price channel.  If this were to happen, Gold would have to rally above $2165 by July 2021.  This would certainly put Precious Metals into a new longer-term bullish price trend.Junior Gold Miners Need To Continue Higher To Confirm Breakout/Rally TrendThe following GDXJ chart highlights the base/bottom that has setup in Junior Gold Miners and also highlights the past failed breakout attempts following the CYAN downward sloping trend line.  If this current breakout attempt is valid, we will see a continued upward price trend that confirms the breach of this downward sloping trend line over the next 5 to 15+ days.  We expect this move to happen fairly quickly given how traders have shifted focus recently into hedging against downside price concerns.Miners and Junior Miners tend to lead Precious Metals prices in volatile price trends.  Junior Miners act as a leader for the Precious Metals sector as investors expect stronger Precious Metals prices to translate into stronger earnings for Junior Miners.  Therefore, when traders perceive Precious Metals prices are bottoming or starting a new uptrend, Junior Miners will likely lead the rally in metals because Junior Miners will directly benefit (bottom-line profits) if metals prices move higher. Ideally, we would like to see a strong close above $53~54 to confirm this upside breakout trend.  This past standout high/resistance level seems key for any continuation of any bullish breakout trends.14+ Months Into A New Depreciation Cycle – What Next?As the US stock market continues to push into new all-time highs almost every week and inflation concerns are starting to rise, while global central banks are still acting to support the global market recovery, it seems oddly similar to the 2001~2009 Depreciation Phase which prompted a rally in Gold from $262 to over $1900 (over 700%).  We wrote about this change in global cycle trends in our December 18, 2020 research entitled Metals & Miners Shifting Gears.The Monthly Gold chart below highlights our research into the broader Appreciation/Depreciation phases of the global markets.  Notice how Gold rallied during the last Depreciation phase (from 2001 to 2011) – even starting to rally higher just before the Depreciation phase started and continuing for nearly a year after it ended.  This happens because global traders/investors start shifting their focus into hedging against risk before the Depreciation Phase actually kicks into gear – just like what is happening right now; on the right edge of this chart.Be sure to sign up for our free market trend analysis and signals now so you don’t miss our next special report!The price Appreciation Phase ended near the end of 2019 (just before the COVID-19 market collapse). Yet, the US stock market has continued to rally higher and higher over the past 24 months, well into the start of the Depreciation Phase cycle.  This is what we call an “Excess Phase Rally” - where prices continue to trend because of momentum and herd mentality from traders.  As we are seeing right now, certain sectors, technology, and the US major indexes are still pushing to new all-time highs.  This is partially because traders continue to pile into the momentum trades/trends – chasing those profits.Gold has started to react to the Depreciation cycle in a way that suggests the global markets may eventually transition into a bit of a sideways price trend or come under some type of renewed valuation concerns over the next 3 to 5+ years.  This type of general market concern, as well as the desire to hedge against risk, may prompt a continued rally in Gold to levels above $3000 - as shown on this chart. Staying ahead of these types of 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 strategy can help you spot the best trade setups. You can learn how to find and trade the hottest sectors right now in my FREE course. 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 it, and how to take profits while minimizing downside risk. In Part II of this article, we'll highlight continued opportunities in various metals/mining stocks/ETF as well as continue to highlight our believe that Precious Metals and Miners are starting a broad market transition into the Depreciation Phase cycle.  Are you ready for it?  Are you ready for increased global stock market volatility and trends while Precious Metals may start a new 140% to 250% potential price rally?Have a great weekend!
Pausing Stocks and Gold Fireworks

Pausing Stocks and Gold Fireworks

Monica Kingsley Monica Kingsley 19.04.2021 16:28
The S&P 500 went back to relentless rallying on Friday, yet the selling wave before the close looks to indicate hesitation ahead. Even though VIX is attacking the 16 level, and the put/call ratio ticked higher, the bulls are little disturbed thus far – and they‘re unlikely to get upset. Whatever consolidation comes, would be a sideways one – one to be bought.That‘s the result of ample liquidity in the system, which is denting the rotations. Yields can go up or down, yet the sectoral adjustments to the downside aren‘t largely there, and that extends beyond the recently discussed financials. It concerns tech specifically, as the sector appears at a turning point – it defended gains: (…) without too much help from the behemoths, and value stocks surged. …. Retail sales outdoing expectations and unemployment claims dropping sharply – the economic recovery is doing fine, manufacturing expands, and inflation doesn‘t yet bite. We‘re still in the reflationary stage where economic growth is higher than the rate of inflation or its expectations.Gold loved the TLT upswing and Powell‘s assurances about not selling bonds back into the market in rememberance of eating a humble pie after the Dec 2018 hissy fit in the stock market (isn‘t this the third mandate actually, the cynics might ask). I called for the sharp gains across the precious metals board sending my open position(s) even more into the black.Miners keep supporting the upswing in both metals, and the technical picture has turned, reflecting the economic realities and commodities‘ run anounced on Wednesday. Now, it‘s up to gold and silver to catch up on what they missed since the early Aug 2020. Inflation is running hotter, and the Fed is tolerant of it, amply supplying liquidity. The gold bottom is in, and much brighter days ahead.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookNew ATHs, again and this time on rising volume – the momentum still largely remains with the bulls in spite of the late day selling pressure, and as said earlier, $NYFANG causing a few short-term wrinkles.Credit MarketsBoth high yield corporate bonds (HYG ETF) and investment grade ones (LQD ETF) have weakened, driven by the TLT retreat. This is a bearish omen unless the bulls step in, which could take a while.Technology and ValueReflecting the decline in long-dated Treasuries, tech wavered while its big names declined, and it was up to value stocks to save the day.Gold in the LimelightThe gold sector is running, and miners show no signs of stopping their solid outperformance of the yellow metal. These two have risen on Friday in spite of TLT turning lower again – the decoupling from nominal yields is getting more pronounced.The miners to gold ratio is as well pointing higher, and the higher low it made at the end of March, speaks volumes. The pressure is to go higher as the next precious metals upleg unfolds.Miners in FocusGold seniors (GDX ETF) are matched in strength by silver miners (SIL ETF), and have convincingly broken above their recent highs and the declining resistance line connecting November and January tops. The unavoidable inflation data bringing down real rates are at work, and silver can be once again expected to start doing better than gold soon, and to considerably increase the open profits.SummaryThe daily S&P 500 consolidation looms, but will be a buying opportunity – not a sign of a market top. If you disliked the staircase climb for offering precious few opportunities to join without a discounted entry, your time is approaching.Gold and miners keep surging as the commodities signposted, little hampered by the daily increase in nominal yields. Patience has been rewarded, and as we closed above $1,775, the gold bottom can be declared as in.
Gold Rebounds Amid Positive Economic Reports

Gold Rebounds Amid Positive Economic Reports

Finance Press Release Finance Press Release 20.04.2021 10:55
Several economic indicators have surprised us on the positive side. Nevertheless, the price of gold has rebounded.Finally! The price of gold has been rising recently . As the chart below shows, the yellow metal rebounded from the late March bottom of $1,684 to above $1,770 on Friday (Mar. 16). This could be a promising start to the second quarter of 2021, which looks better than the first.As you know, gold struggled at the beginning of the year, falling under strong downward pressure created by the improving risk appetite and rising bond yields . But the strength of these factors has begun to fade. You see, it seems that economic confidence has reached its maximum level, and it could be difficult for markets to become even more euphoric.Please take a look at the chart below which shows the level of credit spreads – as you can see, they have fallen to very low levels, which implies that they won’t get much lower than they are right now. So, it appears that the next big move will rather be a rise in credit spreads or a decline in economic confidence.Second, it seems that the rally in bond yields has run out of fuel , at least for a while. The U.S. long-term real interest rates reached their peak of minus 0.56% on March 18 of this year. Since then, they are in a sideways or even downward trend, declining to almost -0.70% last week, as you can see in the chart below.As I explained earlier several times, the markets didn’t buy the Fed’s story of allowing inflation to rise substantially without hiking interest rates for several weeks or even months. However, it seems that Powell and his colleagues have finally managed to convince investors that they are really serious about the new framework, which puts full employment over inflation.Of course, there are also positive geopolitical factors contributing to the rebound in the gold prices . The tensions between the U.S. and China, as well as the U.S. and Russia, have been rising recently. However, it seems that the decline in bond yields allowed gold to catch its breath, and that the macroeconomic outlook – including the credit spreads, interest rates, inflation, monetary policy and fiscal policy – will remain the key driver of gold prices throughout the year.Implications for GoldWhat does all this mean for the price of the yellow metal? Well, the recent jump in the price of gold is encouraging. What is important here is that this rebound occurred amid the flood of positive economic data . For instance, the initial jobless claims have decreased to 576,000, a lower level than expected and the lowest since the pandemic started, as the chart below shows.Additionally, retail sales surged 9.8% in March , following a 2.7% decline in February, while the Fed’s Beige Book reported that “national economic activity accelerated to a moderate pace from late February to early April”. Additionally, both the Philadelphia Fed manufacturing index and the Empire State manufacturing index surprised us on the a positive side.The fact that gold held its gains and continued the rebound even after the publication of several positive economic reports is bullish . Of course, it might be simply the case that the reduction in the real interest rates simply outweighed other indicators, but it’s also possible that gold’s bears got tired.Indeed, the sentiment was so negative in the gold market that it couldn’t get much worse than it already was. Gold shined brightly during the Great Lockdown and economic crisis . But now, when the economy is recovering, gold has become persona non grata . However, this might imply that we are either close to or we have already reached the bottom. Only time will tell, of course, but the macroeconomic outlook seems to be rather friendly for the price of gold, especially if the real interest rates stop rising or even start declining again.If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Gold Reversal? Have No Fear!

Gold Reversal? Have No Fear!

Monica Kingsley Monica Kingsley 20.04.2021 15:38
S&P 500 closed in the the red, vindicating my bearish sentiment going into Monday‘s session. And as I have tweeted during the day, the sellling doesn‘t appear to be over. Friday‘s:(…) selling wave before the close looks to indicate hesitation ahead. Even though VIX is attacking the 16 level, and the put/call ratio ticked higher, the bulls are little disturbed thus far.While VIX rose yesterday, it finished only a little above 17 – the tide in stocks hasn‘t turned to fear even temporarily in the least, and the current consolidation would still be one to be bought.That‘s the result of ample liquidity in the system, which is denting the rotations. Yields moved higher yesterday, and defensives including tech or Down Jones Industrial Average rightly felt the pressure more than value stocks.Gold got caught in the daily selling, but again the miners and commodities reveal how little has changed. Oil and copper keep doing very fine, and the precious metals upleg appears undergoing a daily correction only – one that doesn‘t change the larger trend, which is higher (and for the dollar by the way, it‘s pointing down – I‘m not placing much weight upon the USD link arguing that gold is acting weak to the weakening dollar, and thus has to fall). I look at the ratios, yields and other commodities for stronger clues.And the matter of fact is that inflation expectations have yet again turned higher, confirming my earlier calls about transitioning to a higher inflation environment made either recently or more than a month ago. Remember that the Fed wants inflation above all, and made so amply clear:(…) Now, it‘s up to gold and silver to catch up on what they missed since the early Aug 2020. Inflation is running hotter, and the Fed is tolerant of it, amply supplying liquidity. The gold bottom is in, and much brighter days ahead.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookStocks are visibly in a vulnerable position as not enough new buyers have stepped in. The volume print attests to having to go some more on the downside before a local bottom emerges.Credit MarketsBoth high yield corporate bonds (HYG ETF) and investment grade ones (LQD ETF) weakened, and more so than the TLT did – that‘s what a risk-off environment looks like. Thus far, no change on the horizon – this overdue, little correction can keep going on.Smallcaps and Emerging MarketsBoth smallcaps and emerging markets are revealing the concerted selling yesterday – unless these turn higher next, the S&P 500 has further to go to the downside still.Gold in the LimelightGold‘s daily reversal may look ominous, but really isn‘t – it‘s merely a temporary setback. The miners have held up relatively well, and I consider the yellow metal‘s selloff as a reaction to the retreat in nominal yields and first red day in the S&P 500 in quite a while. I‘m standing by the call of decoupling from nominal yields getting more pronounced, and by increasingly lower dollar values powering precious metals higher, especially in the second half of this year – the USD/JPY pair offers clearly clues for the king of metals even now.Look how stubborn the miners to gold ratio is – no, this precious metals upleg isn‘t ending here, no way, it‘s merely getting started, and the panicked bears doubling down this early from the imperfect second bottom, is telling you as much about the state of the market as the ongoing silver squeeze driving relentlessly PSLV stockpile higher, bypassing the SLV.Silver and CopperSilver retreated in tandem with gold but again the fierce copper (copper to 10-year Treasury yields ratio) reveals that this isn‘t a move to be trusted. The trend in precious metals remains higher.SummaryThe S&P 500 consolidation is here, and is a shallow one just as anticipated. The risk-off moves were evident across the board yesterday, and might very well not be over just yet (when looked at from a larger than daily perspective).Gold and miners are undergoing a shallow correction as well, but nothing more than that. Before too long, precious metals will shake off the setback, and revert to breaking above another resistance, the $1,800s. Since we broke above the two levels I discussed recently (the $1,760s and closing above $1,775 on solid internals), the lows can be comfortably declared as in across the precious metals board, and I look for miners to keep leading the upleg.
Gold Unleashed – Rip Your Face Off Rally Is Here

Gold Unleashed – Rip Your Face Off Rally Is Here

Monica Kingsley Monica Kingsley 21.04.2021 16:30
S&P 500 had another day in the the red, and buy the dippers might be tempted to say enough is enough – but I am not convinced yet. The selling doesn‘t appear as over yet, and the premarket upswing stopped right below my tweeted target of 4,133, overcoming which would have flipped the entry into the U.S. session as bullish. More of the same is expected for today – the bulls would need to demonstrate strength, which I am afraid won‘t convincingly happen right now. The VIX and options traders sense the shifting sands too. We‘re in the correction territory quite firmly now, and it isn‘t over by a long shot.Nominal yields have retreated a little, reflecting the daily downswing in inflation expectations – but the overall dynamics hasn‘t changed as Treasuries keep frontrunning the TIP:TLT. As for liquidity, it‘s still obscuring rotations to a degree, but it must be said that pressure was felt almost fully across the S&P 500 board. That‘s risk-off – a much needed whiff thereof.Gold defied the daily selling stretching over to commodities such as oil. Gold and miners defied also the daily weakness in silver which I rightly found little concerning. The decoupling from the Treasury yields pressure goes on, and is further relieved by Treasuries catching a bid again.The dollar staged a daily reversal, but for how long would that last? The other indicative engine behind the precious metals growth, the USD/JPY pair, is tilting solidly in the direction of the yen carry trade suffering a setback, which means unwinding quite a few „no brainer“ trades, including those short precious metals. Remember, when yen as the safe haven currency strengthens, gold usually likes that.Such is the amply clear big picture:(…) Now, it‘s up to gold and silver to catch up on what they missed since the early Aug 2020. Inflation is running hotter, and the Fed is tolerant of it, amply supplying liquidity. The gold bottom is in, and much brighter days ahead.The stage is set for both gold and silver‘s rip your face of rally, powered by the miners. Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookA bit too early to buy the dip in my view – I would prefer to see signs of strength, including in smallcaps and emerging markets, above much else.Credit Markets and OilThere are signs of stabilization in the credit markets, but not sufficiently so for me yet – high yield corporate bonds (HYG ETF) aren‘t able to keep the ground gained through the day, and investment grade ones (LQD ETF) retreated considerably before the close. Risk on isn‘t in favor yet, and it shows in quite a few S&P 500 sectors, including the persisting weakness in energy or $XOI (the oil sector) that has the power to send black gold lower before it recovers.By the way, oil is in a precarious position short-term, especially should it break on a closing basis below $61.50. Above that, the price action is just a bullish consolidation. The bullish outlook is intact, in spite of the weakness in the oil sector. A break below $59 would worry me though - but I don't think things would get that bad for the bulls really.Technology and ValueDown across the board, but the tech heavyweights matter the most right now. And looking at their performance, the correction isn‘t over yet.Gold and SilverThis is as bullish as it gets. Miners are leading, and Treasury yields aren‘t a headwind any longer for now. Naturally I‘m standing by the call of decoupling from nominal yields getting more pronounced, and by increasingly lower dollar values powering precious metals higher, especially in the second half of this year.Silver isn‘t visibly or consistently outperforming, and not only nominal yields as such, but their ratio accounting for copper, is supporting the unfolding precious metals upleg.SummaryThe shallow S&P 500 consolidation doesn‘t appear over just yet as the risk-off moves were evident across the board yesterday.Gold and miners sharply recovered from their correction as anticipated, and the trend of higher highs and higher lows in the yellow metal goes on. The unfolding precious metals upleg is doing very well, having beaten also $1,775 on strong internals.
Gold & the USDX: Correlations

USD/TRY: testing all-time highs

Kseniya Medik Kseniya Medik 22.04.2021 10:05
Today, USD/TRY is peaking above 8.30 - that's the zone of the all-time highs! The first time the Turkish lira dropped that much value was in November 2020. Back then, a new Turkish Central Bank governor was appointed to put it back onto a healthy course - and Naci Aqbal managed to do it countering double-digit inflation. Eventually, USD/TRY dropped below 7.00. However, unfortunately for the Turkish lira, Naci Aqbal had to leave his post in February - and the national currency of Turkey responded by losing value again. Taking into account these constant staff changes in the highest ranks of the Turkish Central Bank, it's not a surprise that the national Turkish currency behaves in such an unstable manner. On top of that, see that, global investors are increasingly losing faith in the Turkish economy that is becoming less attractive for investment and hence propels the lira's depreciation. One of the reasons for the current upswing of USD/TRY may be the announcement that Joe Biden may officially recognize the actions of the Ottoman Empire in 1915 towards the Armenian population as genocide - a move that will definitely strike hard at the US-Turkish relations, and the Turkish authorities already warned their American counterparts of that. In the meantime, this move may be considered as US warning to Turkey as well: so far, while being in the NATO, Turkey did not hesitate to purchase Russian arms raising questions - at least, on the American side - about the true nature of its intentions and loyalty to the military alliance. In any case, the US-Turkish relations are becoming worse day by day, and that's pressing on the Turkish lira. If it continues like that, USD/TRY may well reach 9.00 in the nearest future. Download the FBS Trader app to trade anytime anywhere! For personal computer or laptop, use MetaTrader 5!
Gold Continues to Rebound, Despite Hawkish Powell’s Letter

Gold Continues to Rebound, Despite Hawkish Powell’s Letter

Finance Press Release Finance Press Release 22.04.2021 15:52
The price of gold rebounded further, despite hawkish Powell’s letter to Senator Rick Scott.The second quarter of 2021 started much better than the first one for the gold bulls . As the chart below shows, the yellow metal rebounded from the late March bottom of $1,684 to $1,778 on Tuesday (April 20).Is it a temporary recovery in a long, downward slide or a return to the bull market that started in 2019? Well, it’s probably too early to determine whether that’s the case. What is, however, crucial here is that the yellow metal has managed to go up, despite some bearish news. The most important fact is that Powell has replied to the letter from Senator Rick Scott on rising inflation and public debt . The Fed Chair’s reply was rather hawkish , as he said that any overshoot of inflation target would be limited:We do not seek inflation that substantially exceeds 2 percent, nor do we seek inflation above 2 percent for a prolonged period (…) we are fully committed to both legs of our dual mandate – maximum employment and stable prices (…) We understand well the lessons of the high inflation experience in the 1960s and 1970s, and the burdens that experience created for all Americans. We do not anticipate inflation pressures of that type, but we have the tools to address such pressures if they do arise.Although Powell didn’t say anything surprising, his tone and emphasis on the commitment to stable prices could be interpreted as generally hawkish and, thus, negative for the gold prices. However, the yellow metal continued its rebound, which is encouraging .Implications for GoldSo why has gold been rising recently? Well, in a sense, the reason might be simple: the sentiment was so negative that the downward trend had to reverse. However, there are also some fundamental factors at play here. First of all, the rallies both in the bond yields and the US dollar have stalled . As the chart below shows, both the greenback and the real interest rates have receded from their March peaks..The declines in the bond and forex markets enabled gold to catch its breath. Of further importance is that they started falling when it became clear that the Fed would be more dovish and tolerant of higher inflation than was originally believed by the markets.Second, there has been a surge in global coronavirus cases which renewed a demand for the safe-haven assets, such as gold . Also, in the US, the number of confirmed cases and hospitalizations is increasing in some areas of the country, despite the vaccination progress. That is the effect of the new variants of the virus and the pandemic fatigue, i.e., many people tired of it have dropped their infection control measures.Third, inflation is accelerating , which is becoming increasingly visible. For example, the latest IHS Markit U.S. Manufacturing PMI shows that costs and charges have historically elevated in March.Supplier lead times lengthened to the greatest extent on record. At the same time, inflationary pressures intensified, with cost burdens rising at the quickest rate for a decade. Firms partially passed on higher input costs to clients through the sharpest increase in charges in the survey’s history.Commenting on the numbers, Chris Williamson, Chief Business Economist at IHS Markit, said:Raw material prices are increasing at the sharpest rate for a decade and factory gate selling prices have risen to a degree not seen since at least 2007. The fastest rates of increase for both new orders and prices was [sic] reported among producers of consumer goods, as the arrival of stimulus cheques in the post added fuel to a marked upswing in demand.What matters here is that the inflationary pressure is likely to remain with us for a while, despite the pundits’ claims that it’s triggered merely by temporary factors. In the 1970s, they were talking the same – until stagflation emerged and gold shined .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
SPX Short Squeeze – Here Or Not?

SPX Short Squeeze – Here Or Not?

Monica Kingsley Monica Kingsley 22.04.2021 16:07
S&P 500 turned around at the open, and didn‘t look back. Is the selling over, have the markets turned the corner? Buy the dip looks to have won the day, VIX has been beaten back, and corporate credit markets scored strong gains. The benefit of the doubt would go with the bulls as the Russell 2000 and emerging markets joined in the buying spree. Heck, even the option traders turned more complacent again.The table looks set for brighter days, but it‘s the odd performance in value (the reopening fireworks don‘t seem to go stale ever really) ignoring retreating yields, which the tech heavyweights strangely neither rejoiced. That reminds me of the dog that didn‘t bark story. I‘m thus looking for a daily consolidation of surprisingly easily gained ground without ruling out a weak downswing attempt – but it‘s the upside potential that‘s looking short-term limited here. The daily SPX chart doesn‘t give me confidence yet to declare this correction as not returning next week.Nominal yields have again retreated a little, and inflation expectations are sending inconclusive messages – but don‘t forget that inflation is what the Fed ultimately wants. It just has to balance that with the Treasuries market not going into a tailspin – for now, mission accomplished, inflation expectations have peaked, move along, nothing to see here.But the higher commodity prices are sending a clear message to the contrary – look for the PPI readings to be affecting CPI increasingly more. Markets aren‘t waiting for the Fed, and have been transitioning to a higher inflation environment already, even though the Fed sold the transitory talking points quite well – it would indeed be a 2022-3 story when inflation supported by the overheating job market would kick in. That‘s the context decreasing nominal yields should be interpreted in.Gold welcomes this reflation period with nominal yields becoming a tailwind, as reflation is also a time when commodities do great, not just the stock market. And we‘re in the decade of precious metals and commodities super bull runs – and these are well underway. The debasement of fiat currencies against real assets is set to continue, and will accelerate given the unprecedented fiscal and monetary support already and ahead – sorry dollar bulls, the greenback declines are resuming – just look at the yen and yields nodding to the metals upswing.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe dip was bought right at the open yesterday, in a tentative sign of strength. A superficial one, precisely, for the correction might not be over.Credit MarketsBoth the high yield corporate bonds (HYG ETF) and investment grade ones (LQD ETF) rose in tandem, but the volume wasn‘t entirely there – similar to stocks. Regardless of the sectoral imbalances discussed below, it‘s a strong argument for why any resumption of selling won‘t likely get too far.Technology and ValueValue keeps pulling the 500-strong index ahead while the leadership in tech remains outside the woefully underperforming heavyweights. I‘m looking at that to change over time, though.Gold and SilverGold upswing is still in a healthy shape, with miners outperforming. The retreating nominal yields have turned into a tailwind as gold gathers strength to break the $1,800 level shortly.Yesterday was characterized by silver‘s strength, and that means an issue of varying proportions usually ahead. But I am interpreting the chart as a weak setback only, a very temporary one – this isn‘t any kind of turnaround.Gold‘s Big PictureThis is the key chart proving that the precious metals upleg has started weeks ago – the caption says it all. Look for much higher prices ahead as weeks and months roll by.SummaryThe shallow S&P 500 consolidation won‘t likely continue today as another good unemployment figure came in, and I look for the sectoral imbalances to improve later today and tomorrow.Gold and miners are taking a little breather, together with silver. Nothing unexpected or groundbreaking, the precious metals upleg is well established already, and $1,800 will be history as early as next week, when the rip your face off rally continues.
Those Tax Hikes I Warned About..

Those Tax Hikes I Warned About..

Finance Press Release Finance Press Release 23.04.2021 15:57
Remember how every month in 2021 started off hot and then saw a pullback and volatility occur by the second half of the month? Welcome to the second half of April.After switching my calls on the SPDR S&P ETF (SPY) and the SPDR Dow Jones ETF (DIA) a week ago (Apr. 16), both have declined over 1% and are on track for their first losing weeks in more than a month.Despite the month’s promising start with blowout jobs reports, stronger-than-expected earnings, the lowest jobless claims in months, and more, remember how I said to stay vigilant on inflation and potential tax hikes?Well, the market on Thursday (Apr. 22) tanked thanks to rumblings that President Biden could hike the capital gains tax rate for those earning over $1 million. This isn’t just some ordinary tax hike either. Biden would essentially double the current tax rate of 20% to 39.6% for those wealthy investors and hike it as high as 43.4% for the richest of the rich.Not to mention President Biden has been talking for weeks about hiking corporate taxes to 28%.Tax the rich? Guess Mr. President has to fund his spending sprees somehow, no?Although April historically has been the strongest month for stocks over the past 20 years, with the S&P 500 witnessing gains in 14 of the past 15 years, not everything is smooth sailing right now. Especially if you’re a SPAC or a speculative sector.In fact, for the broader market, I’d even caution that we may be at or around a peak, with most of the good news priced in already. Despite what’s been a rough week, the Dow and S&P are still at historically high levels. According to Binky Chadha , Deutsche Bank’s chief U.S. equity strategist, we could see a significant pullback between 6% and 10% over the next three months because of potentially full valuations and inflation fears.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:We could see more volatility and more muted gains than what we’ve come to know over the last year.April is historically strong, but please monitor overvaluation, inflation, bond yields, and potential tax hikes. Be optimistic but realistic. A decline above ~20%, leading to a bear market, appears unlikely. Yet, we could eventually see a minor pullback by the summer, as Deutsche Bank said.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Is the S&P Still Too Frothy?Figure 1- S&P 500 Large Cap Index $SPXOn the one hand, according to Sanford C. Bernstein strategists, the S&P 500 index could double by the end of the decade and reach 8,000.Historically, we could really be at a strong entry point for the long-term too. Over two weeks ago, we marked the first anniversary of this bull market. Historically, S&P 500 bull markets since 1957 on average resulted in price gains of 179% and lasted an average of 5.8 years.Because the S&P 500 has risen just about 84.81% since March 23, 2020, if history tells us anything, we may just be getting started.Furthermore, earnings season is off to a roaring start, with companies crushing estimates. There’s no reason to believe this will end either. Not to mention, it’s April, historically the strongest month for stocks.On the other hand, despite this week’s minor pullback, the S&P 500 continues to hover around record highs as it approaches 4200 for the first time in its history. It’s also potentially historically overvalued. I’m more worried about valuations than I am excited about earnings.Also, I’m not pleased about potential tax hikes for this frothy market.I don’t see this as a buyable index at the moment. While it’s not quite as frothy as it was a week ago and more of a HOLD as of April 23, 2021, if it pops anymore, it could be more sellable. I’d prefer a deeper pullback.HOLD. The S&P has skyrocketed to unprecedented levels and valuations, but strong earnings could give the index some momentum. For an ETF that attempts to directly correlate with the performance of the S&P 500, the S&P 500 SPDR ETF (SPY) is a great option.For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
The Tax Plan to Slay the Stock Bull?

The Tax Plan to Slay the Stock Bull?

Monica Kingsley Monica Kingsley 23.04.2021 16:11
A day like almost any other – S&P 500 about to take again on the ATHs until the capital gains tax hike proposal came, shaving off 50 points in stocks within an hour. The 4,415 support held though, both before and after the closing bell. Are we ready to shake off the cold water and resume running higher again?Depends on where you look – stocks have quite some recovering still to do, and it‘s the precious metals and commodities that are performing best today. Both as an index and sectoral collection, the S&P 500 sustained broad damage, concentrated in the tech heavyweights. The volatility spike has been partially repelled but option traders seem expecting another shoe to drop, which attests to us better dampening expectations of a fast return above 4,170.Look still though how little has changed, as if the tax raising plans haven‘t been around since the infrastructure bill or implicitly even before. It‘s still April, and markets are pricing in not only this select reality, but broader tax increases coming. Yes, they have woken up, and the reflation paradigm is getting an unwelcome companion. This hit won‘t bring down the bull, but will slow it down – and the implications for broader economy will only hasten the pronounced advent of the commodities supercycle (well underway since the corona deflationary crash last year). As the Chinese say, may you live in interesting times, and I am glad to have caught the April 2020 turnaround reasonably well. I‘m bringing this up just to say that this isn‘t the time to turn bearish on stocks yet – not in the least. The initial panic is over, real economy keeps recovering (amazing how fast were the reasonably good unemployment claims of yesterday forgotten, right?), inflation expectations aren‘t running progressively hotter, and Treasury yields continue retreating.Another argument for why this is a storm in a tea cup (I‘m talking merely stock market perspective now, not the very real consequences about to hit the economy like a trainwreck in slow motion), is the Russell 2000 and emerging markets performance yesterday – reasonably bullish given the setback most keenly felt in the S&P 500 and Bitcoin. Unless the latter recaptures $52,500 promptly and convincingly, it‘s going to remain in hot water as yet another tax cash cow on the horizon, which aligns nicely with the Yellen weekend cryptos announcement. A bit over 24hrs ago in response to a question from my great West Coast subscriber, I highlighted Bitcoin vulnerability as it has been unable to revert back above the 50-day moving average, drawing the $52,500 line in the „bulls still have a chance“ sand. Now, I would have to be convinced by the upswing‘s strength recapturing said level, which I‘m not expecting even though the asset trades quite extended relative to the lower border of its daily chart Bollinger Bands.Thus far, precious metals, copper, oil and other commodities are holding up best – little surprising given the risk-off nature of yesterday‘s move and potentially misplaced hopes that the 28% collectibles tax on the metals would survive. These things tend to creep.Gold or miners held up reasonably well yesterday, and I look for them to be fastest in recapturing the lost ground, followed by silver. The precious metals upleg has started, we‘re in a real assets super bull market, and this little hiccup won‘t derail it. The sad implication would actually drive it as capital formation would be hampered, unproductive behaviors encouraged, and potential output lowered. Pretty serious consequences – add to which inflation as that‘s what the Fed ultimately wants, and the recipe for more people falling into higher tax brackets through illusory gains, is set. Then, as inflation starts firing on all cylinders – a 2022-3 story when the job market starts overheating – the pain would be felt more keenly. And this is supposed to be the environment where the dollar would be in a bull run, now and ever? Wake up:(…) we‘re in the decade of precious metals and commodities super bull runs – and these are well underway. The debasement of fiat currencies against real assets is set to continue, and will accelerate given the unprecedented fiscal and monetary support already and ahead – sorry dollar bulls, the greenback declines are resuming – just look at the yen and yields nodding to the metals upswing.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe intraday reversal is thus far lacking volume and follow through. That means it would be premature to jump to conclusions as to the shallow correction extending deeper.Credit MarketsThe high yield corporate bonds to short-term Treasuries (HYG:SHY) ratio isn‘t panicking either. So far, the move has been hesitant and orderly.Technology and ValueValue keeps being most resilient, and the tech sector stands in the middle, dragged lower by the heavyweights. I would like these to stop leading to the downside so as to declare the correction as approaching its end in terms of prices.Inflation ExpectationsThe inflation expectations are in a momentary limbo, but seem as likely to rise again shortly. That would be one more piece of the puzzle bringing real rates down, making the yellow metal‘s fundamental outlook more positive (as if it hadn‘t been already).Gold and SilverThe decline across the gold sector has been orderly yesterday, and the retreating yields (helped by the stock market turmoil) are putting a nice floor below the king of metals. I look for miners to keep leading higher shortly again.The key message is the one by the copper to 10-year Treasuries yield – a little hesitation yesterday, hinting at a little more time being necessary to overcome the $1,800 barrier next.SummaryThe S&P 500 is at a crossroads determining how low would the shock-facilitated consolidation stretch. Thus far, signs are modestly leaning in favor of the worst being in, and a gradual repair coming next.Gold and miners took a daily dive in sympathy with stocks yesterday, but I look for the precious metals sector to recover fastest, and overcome the next resistance convincingly.
Will a Fiscal Revolution Raise Gold to the Throne?

Will a Fiscal Revolution Raise Gold to the Throne?

Finance Press Release Finance Press Release 23.04.2021 16:29
Revolution, baby! There is growing acceptance for an aggressive fiscal policy, which could be supportive for gold prices from the fundamental, long-term point of view.We live in turbulent times. The pandemic is still raging and will most likely have lost lasting effects on our society. But a revolution is also happening right before our eyes. And I don’t mean another storming of the U.S. Capitol or the clash of individual investors with big fish on Wall Street. I have in mind something less spectacular but potentially more influential: a macroeconomic revolution.I refer here to the growing acceptance of easy fiscal policy . In the aftermath of the Great Recession , the central banks adopted an aggressive monetary policy , slashing interest rates to almost zero and introducing quantitative easing . It has become a new norm since then.But fiscal policy was another kettle of fish. Although almost nobody cared about balanced government budgets, people at least pretended to worry about overly large fiscal deficits and an overly quick accumulation of public debt . For example, while Obama wanted $1.8 trillion in fiscal stimulus in a response to the global financial crisis of 2007-09, Congress passed a package of about $800 billion, as Republicans opposed larger spending. But in March 2020, Congress passed the CARES act worth about $2 trillion (and additional significant stimulus in December 2020), with the full support of Republicans.Even Germany – the country famous for its fiscal conservatism – ran a fiscal deficit in 2020 and – what’s more – agreed to issue bonds jointly with other EU countries, although it was previously a taboo. The International Monetary Fund (IMF), another bastion of economic orthodoxy, which advocated for austerity and balanced budgets for years, gave up during the epidemic and started to call for more fiscal stimulus to fight the economic crisis .And this fiscal revolution is already seen in data. As the chart below shows, the U.S. fiscal deficit has increased from 4.6 percent of GDP in 2019 (which was already at an elevated level) to 15 percent of GDP in 2020, the highest level in the post-war era.According to the IMF’s Fiscal Monitor Update from January 2021 , fiscal deficits amounted to 13.3 percent of GDP , on average, in advanced economies, in 2021, a spike from 3.3 percent seen in 2019. As a consequence, the gross global debt approached 98 percent in 2020 and it’s projected to reach 99.5 percent of the world’s GDP by the end of this year.What is important to note here is that government support wasn’t limited mainly to the financial institutions and big companies (such as automakers), as was the case in 2009, but it was distributed more widely. There was a huge direct money transfer to Main Street, including checks for practically all citizens. This is important for two reasons.First, money flowing into the economy through nonfinancial institutions and people’s accounts may be more inflationary. This is because money doesn’t stay in the financial market where it mainly raises asset prices, but it’s more likely to be spent on consumer goods, boosting the CPI inflation rate . Higher officially reported inflation (and relatively lower asset prices) should support gold , which is seen by investors as an inflation hedge .Second, the direct cash transfer to the people creates a dangerous precedent. From now, each time the economy falls into crisis, people will demand checks. It means that fiscal responses would have to be increasingly larger to meet the inflated expectations of the public. It also implies that we are approaching a universal basic income, with its mammoth fiscal costs and all related negative economic and social consequences.Summing up, we live in revolutionary times. The old paradigm that “central banks are the only game in town” has been replaced by the idea that fiscal policy should be more aggressively used. Maintaining balanced budgets is also a dead concept – who would care about deficits when interest rates are so low?However, assigning a greater role to fiscal policy in achieving macroeconomic goals increases the risk of higher inflation and macroeconomic instability, as politicians tend to be pro-cyclical and reckless. After all, the economic orthodoxy that monetary policy is better suited to achieve macroeconomic stability didn’t come out from nowhere, but from awful experiences of the fiscal follies of the past. I’m not a fan of central bankers, but they are at least less short-sighted than politicians who think mainly about how to win the next election and stay in power.Hence, the growing acceptance of easy fiscal policy should be positive for gold prices , especially considering that it will be accompanied by an accommodative monetary policy. Such a policy mix should increase the public debt and inflation, which could support gold prices. The caveat is that investors have so far welcomed more stimulus flowing from both the Fed and the Treasury. But this “go big” approach of Powell and Yellen increases the longer-term risk for the economy, which could materialize – similar to the pandemic – sooner than anyone thought.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 a 7-day no-obligation trial for all of our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
No Upsetting the Apple Cart in Stocks or Gold

No Upsetting the Apple Cart in Stocks or Gold

Monica Kingsley Monica Kingsley 26.04.2021 15:35
The tax hike proposal shock is over, and S&P 500 took again on the ATHs on Friday. Buying pressure throughout the day lasted almost till the closing bell, and is likely to continue this week as well. And why shouldn‘t it – has anything changed? The artificial selling any capital gains tax hike would generate, is likely to come before year end – not now:(…) Look still though how little has changed, as if the tax raising plans haven‘t been around since the infrastructure bill or implicitly even before. It‘s still April, and markets are pricing in not only this select reality, but broader tax increases coming. Yes, they have woken up, and the reflation paradigm is getting an unwelcome companion. This hit won‘t bring down the bull, but will slow it down – and the implications for broader economy will only hasten the pronounced advent of the commodities supercycle (well underway since the corona deflationary crash last year). The move towards risk-on was clearly there, overpowering the USD bulls yet again as the dollar bear market has reasserted itself. It‘s not just about EUR/USD on the way to its late Feb highs, but about the USD/JPY too – the yen carry trade is facing headwinds these days, acting as a supportive factor for gold prices. While these went through a daily correction, commodities pretty much didn‘t – lumber is powering to new highs, agrifoods didn‘t have a down day in April, copper and oil scored respectable gains. The market is in a higher inflation environment already, and it will become increasingly apparent that commodity-led inflation is here to stay.Back to stocks and bonds, the S&P 500 took well to a daily rise in Treasury yields – and that‘s the key factor overall. The turnaround was most clearly seen in tech heavyweights but defensive sectors such as consumer staples or utilities didn‘t do well (they‘re interest rate sensitive, after all), and Dow Jones Industrial Average traded closer to the optimistic side of the spectrum. The second piece of the puzzle came from value stocks and financials, which are working to put an end to their own shallow correction – just as you would expect when rates take a turn higher.So, another volatility spike has been banished, but option traders aren‘t yet satisfied, and keep piling into protective instruments. I view this as a fuel of the upcoming rally continuation, unless the tech‘s earnings batch doesn‘t disappoint as Netflix subscriber base growth did.One more argument in favor of the S&P 500 upswing, comes from the smallcaps – the time of their outperformance, is approaching. Likewise emerging markets are starting to do better, and the dollar effect is part of the explanation.Gold took sensitively to the rise in yields, and retreating dollar didn‘t lift it up really. The yellow metal disregarded proportional increase in inflation expectations, and so did the miners – indicating that a brief soft patch in the precious metals sector can‘t be excluded. This doesn‘t change my Friday‘s thoughts that:(…) The precious metals upleg has started, we‘re in a real assets super bull market, and this little hiccup won‘t derail it. The sad implication would actually drive it as capital formation would be hampered, unproductive behaviors encouraged, and potential output lowered. Pretty serious consequences – add to which inflation as that‘s what the Fed ultimately wants, and the recipe for more people falling into higher tax brackets through illusory gains, is set. Then, as inflation starts firing on all cylinders – a 2022-3 story when the job market starts overheating – the pain would be felt more keenly. Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookIt‘s not an issue that the two latest upswings happened on decreasing volume as I view the preceding modest volume spike as a sign of weak selling turning into accumulation. There is plenty of doubt to drive further S&P 500 gains.Credit MarketsBoth high yield corporate bonds to short-term Treasuries (HYG ETF) and investment grade ones (LQD ETF) have risen on Friday, and the divergence to long-dated Treasuries is another key factor driving the risk-on return conclusion.Technology and FinancialsThe $NYFANG strength was the key deciding factor in the S&P 500 upswing, and value stocks didn‘t stand in the way much either. Financials joined in the upswing by tech are a sign of the shallow correction drawing to its end.Gold & Miners WeeklyCompare this chart to the one that I published on Thursday – the red candle smacking of reversal is actually just an initial rejection in my view. It‘ll take a while to return back above the 50-day moving average, but that‘s a question of time merely. Gold miners are still outperforming, and the upside momentum in the gold sector merely paused. We may see a brief pullback as the bears try their luck, but it will be only a temporary setback – there is no telling weakness in any of the markets I am looking at that would indicate otherwise.Gold, Silver and Key RatioThe copper to 10-year Treasury yield ratio shows that the markets aren‘t buying the transitory inflation story – the rush into commodities goes on, and justifiably so. Just look how much silver has been resilient, and the white metal is uniquely positioned to benefit both from the economic recovery, forced shift into green economy, and building monetary pressures.Seniors vs. JuniorsThroughout the 10+month long correction, juniors had been the more resilient ones, but it was the seniors that I called to lead gold out of the bottom. And they did, meaning that juniors had underperformed over the coming month clearly. Once animal spirits return even more to the precious metals sector, their outperformance is likely to return as the market appetite for ounces in the ground grows. We aren‘t there yet, but the new upleg is well underway.SummaryThe S&P 500 turned around convincingly, and new highs are a question of a rather short amount of time – be prepared though for headline risks should we get an (unlikely) earnings disappointment.Gold and miners are in consolidation mode as they failed to take advantage of plunging dollar and rising commodity prices, but the precious metals sector is likely to play a catch up relative to commodities as its sluggish post Aug performance would get inevitably forgotten.
The Inflation Tsunami About to Hit

The Inflation Tsunami About to Hit

Monica Kingsley Monica Kingsley 27.04.2021 15:59
Stocks went on to push higher yesterday – the pressure is building. Trends in place since last week, remain in place for this earnings rich one too. Reflation still rules, reopening trades are well underway, and inflation expectations are modestly turning up again without putting too much strain on the Treasury markets.While Monday wasn‘t an example of a risk-on day, the markets are clearly moving there:(…) overpowering the USD bulls yet again as the dollar bear market has reasserted itself. It‘s not just about EUR/USD on the way to its late Feb highs, but about the USD/JPY too – the yen carry trade is facing headwinds these days, acting as a supportive factor for gold prices. While these went through a daily correction, commodities pretty much didn‘t – lumber is powering to new highs, agrifoods didn‘t have a down day in April, copper and oil scored respectable gains. The market is in a higher inflation environment already, and it will become increasingly apparent that commodity-led inflation is here to stay.Yesterday was a great day for commodities again as these scored stronger gains than tech or $NYFANG, the main winners within the S&P 500 (defensives took it on the chin – seems like we‘re about to see rates move higher again). Anyway, VIX didn‘t object as options traders piled into the clearly complacent end of the spectrum again. Both the Russell 2000 and emerging markets loved that – the best days for smallcaps are clearly ahead:(…) the time of their outperformance, is approaching.Gold miners didn‘t outperform the yellow metal yesterday while silver did – are the ingredients for a metals‘ top in place? I don‘t think so, and have actually called out on Twitter the GDX downswing as likely to be rejected and ending with a noticeable lower knot. And here we are. No changes to my Friday‘s thoughts that:(…) The precious metals upleg has started, we‘re in a real assets super bull market, and this little hiccup won‘t derail it. The sad implication would actually drive it as capital formation would be hampered, unproductive behaviors encouraged, and potential output lowered. Pretty serious consequences – add to which inflation as that‘s what the Fed ultimately wants, and the recipe for more people falling into higher tax brackets through illusory gains, is set. Then, as inflation starts firing on all cylinders – a 2022-3 story when the job market starts overheating – the pain would be felt more keenly. When even Larry Summers starts talking the dangers of an inflationary wave, things are really likely getting serious down the road. On a side note, my tomorrow‘s analysis will be briefer than usual, and published probably a bit later as I have unavoidable dental treatment to undergo. Thank you everyone for your patience and loyalty – it‘s already a little over 3 months since I could start publishing totally independent. Thank you so much for all your support!Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe bears are certainly running (have certainly run) out of time, and the upper knot of yesterday‘s session looks little concerning to me. Tesla enjoying the Bitcoin moves, more tech earnings soon, and favorable sectoral composition of the S&P 500 advance favor the coming upswing.Credit MarketsDebt instruments got under pressure – high yield corporate bonds (HYG ETF) and investment grade ones (LQD ETF) have declined in a signal of non-confirmation, and joined the long-dated Treasuries in their downswing. I am not yet convinced this is a serious enough more to warrant a change in S&P 500 outlook.Technology and FinancialsThe $NYFANG strength continues, powering tech higher – and that‘s the engine behind solid S&P 500 performance. Notably, financials weren‘t waiting yesterday on other value stocks turning higher, and that‘s bullish.Gold, Silver and MinersGold caught a bid, and refused to decline intraday, which almost matches the miners‘ performance. Given these two daily stands, I‘m in favor of disregarding the usual outperformance warning of silver doing considerably better.This is the proper view of the miners and miners to gold ratio – noticeable outperformance in the latter while the former is getting ready to rise again.Gold and the Key RatioAs is visibly even more true today than yesterday, the copper to 10-year Treasury yield ratio shows that the markets aren‘t buying the transitory inflation story – the rush into commodities goes on, and justifiably so. This chart is clearly unfavorable to lower metals‘ prices.SummaryThe S&P 500 keeps pushing for new all time highs, which looks to be a matter of relatively short time only. Credit markets non-confirmation is to be disregarded in favor of strong smallcaps, emerging markets and cornered dollar in my view.Gold and miners are in consolidation mode, but this is little concerning to the bulls. No signs of an upcoming reversal and truly bearish plunge - the precious metals sector is likely to play a catch up relative to commodities as its sluggish post Aug performance would get inevitably forgotten.
Will Euro and Gold Go Up With Pandemic Upturn in Euro Area?

Will Euro and Gold Go Up With Pandemic Upturn in Euro Area?

Finance Press Release Finance Press Release 27.04.2021 16:39
The worst may already be behind the euro area’s economy. This bodes well – both the euro, as well as gold, can benefit from it.The Governing Council of the European Central Bank met last week, keeping its monetary policy unchanged. The inaction was widely expected - no surprises here. The June meeting could be much more interesting as the ECB will have to decide whether or not to slow its bond buying under the Pandemic Emergency Purchase Programme that was accelerated in the second quarter of the year. Given the dovish stance of the European policymakers, and the bank’s pledge to provide the markets with favorable financing conditions during the pandemic, we shouldn’t expect any tapering soon.Certainly, there are important dovish parts of the latest ECB’s statement on its monetary policy . It stems from the grim economic situation in the euro area. The real GDP declined by 0.7 per cent in the fourth quarter of 2020, and it is expected to decrease again in the first quarter of 2021. The nearest future doesn’t look promising:The near-term economic outlook remains clouded by uncertainty about the resurgence of the pandemic and the roll-out of vaccination campaigns. Persistently high rates of coronavirus (COVID-19) infection and the associated extension and tightening of containment measures continue to constrain economic activity in the short term.However, investors should always look beyond the near-team outlook. In the medium-term, the situation in the euro area looks much better. As the ECB notes, this is because the current virus wave seems to have peaked in Europe, while the pace of vaccination is accelerating:Looking ahead, the progress with vaccination campaigns, which should allow for a gradual relaxation of containment measures, should pave the way for a firm rebound in economic activity in the course of 2021.Furthermore, the European Union’s 750 billion euro recovery fund has cleared a key court challenge. Last week, the Germany’s constitutional court dismissed objections to the European aid package.All these factors are positive for the euro and, thus, also for the price of gold. As you can see in the chart below, gold was highly correlated with the spread between the American and German long-term government bond yields - the widening divergence in the US and European interest rates that started in August 2020 pushed the yellow metal down.Implications for GoldThe third wave of pandemic has already peaked in Europe; therefore, the old continent may somewhat catch up with the US. This could narrow the divergence in yields, creating downward pressure on the greenback while supporting the gold prices .Another positive factor for the euro and the yellow metal is the fact that although inflation jumped in both the US and the euro area, it’s much higher in the former country as the chart below shows. So, the purchasing power parity could support the common currency, as well as gold, against the greenback.What’s funny here is that Lagarde , just as Powell , argued that inflation “has picked up over recent months on account of some idiosyncratic and temporary factors and an increase in energy price inflation”. Sure, some idiosyncratic and temporary factors helped inflation to soar, but there are always some idiosyncratic and temporary factors. All the same, the central bankers point to them only when inflation rises, never when it declines. They always refer to these factors to justify their dovish bias and easy monetary policy.Of course, it might be the case that inflation won’t materialize, just like it never did after the Great Recession . But this time may be really different due to the surge in the broad money supply and a huge increase in government spending in the form of direct cash transfers to citizens who are hungry for traveling, eating in restaurants, and generally a normal life with all its money-spending. So, inflation is the wild card, which makes it reasonable to have some gold in investment portfolios . Investors should remember that gold is an investor’s asset rather than a demand asset, which means that in periods of reflation , gold initially lags commodities, only to outperform them and shine brightly in later phases.If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Intraday Market Analysis – From Support To Resistance

Intraday Market Analysis – From Support To Resistance

John Benjamin John Benjamin 28.04.2021 08:14
USDJPY rises to major resistanceThe Japanese yen stayed muted after the Bank of Japan revised down its inflation forecasts.The bearish MA cross on the daily time frame may weigh on the US dollar as it recovers towards 108.90, a previous daily support now turned into a resistance.The rally above 108.20 in the short-term has prompted some sellers to cover reducing the downward pressure. A close above 108.50 would help gain momentum.As the RSI shows an overbought situation, 108.20 would be the first support In case of a retracement.EURGBP tests triple topEuro buyers are encouraged by news of easing of restrictions in Italy and France. The pair has risen back to the major support area around 0.8720-0.8730.After the failure of the first test, strong bids have supported the price to form a triple top. Would the third time be the charm?A neutral RSI gives buyers enough space to play around. A breakout above 0.8730 would confirm the bullish MA cross on the daily chart and trigger a rally towards 0.88s.On the downside, a drop below 0.8670 may drive the correction down to 0.8630.GER 30 consolidates near a record highThe German index stagnates as the earnings season kicks off in Europe. Last week’s sell-off below 15180 was a sign that buyers took profit after the index made a series of record new highs.On the daily chart, the uptrend is so far intact as the price action hovers above the 20-day moving average. 15410 is the immediate resistance and a bullish breakout would resume the upward movement.However, a breach below 15090 could dent the short-term optimism and trigger a new round of sell-off to 14800.
Calm Down, It‘s a Shallow Gold Correction

Calm Down, It‘s a Shallow Gold Correction

Monica Kingsley Monica Kingsley 28.04.2021 17:55
Stocks keep pushing higher after a day of indecision yesterday, and the signals are largely still very constructively aligned behind another upswing. Yes, stocks are moving overall up as we approach the Fed statement and press conference. It‘s the precious metals that are on the defensive – a fact I had been writing about both on Monday and Tuesday, as well as tweeting out extensively before leaving for the dentists‘ - I wish that visit was both easier and took less time, and I could prepare a longer analysis for you today instead.Let‘s talk today‘s moves and charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe sectoral composition of the SPX upswing, isn‘t exactly strongest, but that‘s no obstacle to the unfolding move higher. A measured one, prone to brief and shallow intraday pullbacks whose upward bias can‘t be denied though. That‘s the path of least resistance, and I do like also both smallcaps and emerging markets.Gold Before the Opening BellThe outlook for gold deteriorated during the second half of yesterday‘s trading as copper gave up some of its gains while long-dated Treasuries plunged. And overnight, gold felt obliged to fill the void, and went $10 down.Precious Metals in the NowThe situation is far from bleak – gold is nibbling at the bearish gap, but it‘s the miners that are providing more than a glimmer of hope. And as silver is losing altitude (short-term painful but of little consequence given how great a future awaits the white metal shortly), we‘re witnessing short-term rebalancing in the precious metals sector. Namely since long-dated yields have barely moved thus far and copper almost erased its overnight losses already.SummaryThe S&P 500 keeps pushing for new all time highs, and today‘s Fed isn‘t likely to change that materially. No, I‘m not looking for them making any noises about taking away the punch bowl.Gold‘s downswing would likely prove short-lived, and miners would be pulling the PMs sector ahead again. Once the sector stabilizes in both time and price, silver would catch up again. Let‘s see how successful the Fed is today in selling the transitory inflation story and defending Treasuries, really.
Intraday Market Analysis – Bearish Momentum

Intraday Market Analysis – Bearish Momentum

John Benjamin John Benjamin 29.04.2021 08:21
USDCHF breaks below consolidation rangeThe US dollar remains subdued as the Fed offers no signs of tapering.After falling below the key level at 0.9220, the bearish MA cross on the daily time frame may keep buyers at bay. Their failure to lift offers around 0.9180 despite a week-long consolidation strongly suggests that sellers are in control.Any rebound was seen as an opportunity to join the downward movement. A close below 0.9115 could render the greenback vulnerable.0.9040 would be the next target should there be a new round of sell-off.AUDUSD tests double topThe Australian dollar shrugged off March’s weaker-than-expected CPI as risk appetite grew.The pair has met stiff selling pressure at the supply zone around 0.7820, the origin of last month’s sell-off. However, the Aussie has established a solid base above 0.7700.As the RSI bounces back into the neutral area from the sub-30 level, the bullish momentum from 0.7725 is a sign of buying the dip.A breakout above 0.7815 may trigger a runaway rally to 0.7950, a prerequisite to resuming the fourteen-month-long uptrend.XAGUSD gathers bullish momentumSilver strengthens as the US dollar’s sell-off continues after the Fed’s cautious tone on inflation. The precious metal has come to rest after reaching the major resistance (26.60) on the daily chart.The bullish MA cross is an indication of strong buying interest. A breakout above that resistance would confirm the bullish bias and send the price to 28.20.On the hourly chart, sentiment remains upbeat as long as the price action stays above 25.70.A bearish breakout could extend the correction towards 25.20.
Enough Consolidation Already!

Enough Consolidation Already!

Monica Kingsley Monica Kingsley 29.04.2021 15:43
Stocks are readying another push higher, and not just on the heels of the still accomodative Fed. The Fed won‘t simply remove the punch bowl, let alone discuss removing it, and will keep repeating the transitory inflation mantra ad nauseam. The ingredients are in place for a continued upswing in stocks and commodities. Look for nominal yields to continue rising, and my hunch is that won‘t be enough to turn the dollar around. We‘re about to experience continuously rising inflation expectations, rising nominal yields, and declining dollar:(…) When even Larry Summers starts talking the dangers of an inflationary wave, things are really likely getting serious down the road. (…) we‘re in the decade of precious metals and commodities super bull runs – and these are well underway. The debasement of fiat currencies against real assets is set to continue, and will accelerate given the unprecedented fiscal and monetary support already and ahead – sorry dollar bulls, the greenback declines are resuming – just look at the yen and yields nodding to the metals upswing.And the emerging markets are embracing the unfolding currency moves – they are rising with more vigor than the Russell 2000 lately. Little wonder for they are farther from their prior highs than the smallcaps. When it comes to S&P 500 sectors, yesterday brought us a rare rotation out of tech while the heavyweights still eked out minor gains – and that rotation is as telling a sign of a risk on sentiment returning as much as the credit market performance is.The key more in the gold sector was in the miners, whose continued resilience is a good omen. In other words, what a recovery from the daily setback I covered amply between the regular trading sessions on Tuesday and Wednesday. Enriching the examination with copper and yen performance, let alone real yields, leads to a universally bullish verdict on the precious metals upcoming price path.What‘s not to love about this reflation before inflation starts to bite noticeably more? Forget about those pesky commodities and my incessant bullish calls within the sector too…Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookStocks are merely gathering strength before another upswing. Enough consolidation already, seems to be the rallying cry here.Credit MarketsA strong sign of risk-on returning here – high yield corporate bonds (HYG ETF) clearly outperformed investment grade ones (LQD ETF), and these mirrorer the long-dated Treasuries performance.Technology and FinancialsAnother proof of risk-on is in both the technology performance disregarding $NYFANG holding ground, and in the Dow Jones Industrial Average weakness. Value stocks and cyclicals such as financials (XLF ETF) are having a field day, and as will be apparent from today‘s oil analysis, energy (XLE ETF) is a great pick as well.Gold, Silver and MinersGold caught a bid, and refused to decline intraday, but the miners scored gains – that‘s as bullish as it gets. It might seem disappointing in light of nominal yields not going anywhere, but only until you examine the great copper performance.Gold‘s volume hints at accumulation within this flag-approximating consolidation, where the next upswing would be ushered in by the miners. Note how silver gave up prior day‘s gains, and remains ready to join strongly next.Crude OilOil is in an upswing mode, and the bullish spirits are confirmed by the oil sector ($XOI) moves. The multiweek consolidation is in its closing stages.SummaryThe S&P 500 keeps pushing for new all time highs, and remain well positioned to close there any day now, especially since the credit markets favor risk on, and the defensives underperformance concurs.Gold and miners are ready for another upswing, and the commodities performance, inflation expectations and nominal yields trajectory favor that. The inability of the sellers to push prices below $1,760 speaks volumes.
Will Powell Lull Gold Bulls to Sweet Sleep?

Will Powell Lull Gold Bulls to Sweet Sleep?

Finance Press Release Finance Press Release 29.04.2021 16:20
The Fed left its monetary policy unchanged. However, the lack of any action amid economic recovery is dovish – good news for gold.On Wednesday (Apr. 28), the FOMC has published its newest statement on monetary policy . The statement wasn’t significantly altered. The main change is that the Fed has noticed the progress on vaccinations and strong policy support, and that, in consequence, the economic outlook has improved.Previously, the US central bank said that indicators of economic activity and employment “have turned up recently, although the sectors most adversely affected by the pandemic remain weak”, while now these indicators “have strengthened”, while “the sectors most adversely affected by the pandemic remain weak but have shown improvement”. So, the Fed acknowledged the fact that the economy has significantly recovered .Similarly, the US central bank is no longer considering the epidemic as posing “considerable” risks to the economic outlook. Instead, the pandemic “continues to weigh on the economy, and risks to the economic outlook remain”. It means that the Fed has become more optimistic and does not see risks as considerable any longer. This is bad for the price of gold although it’s not a very surprising modification, given the progress in vaccinations. However, no hawkish actions will follow, so any bearish impact for gold should be limited.Another important alteration is that inflation no longer “continues to run below 2 percent”, but it “has risen, largely reflecting transitory factors”. This would be normally a hawkish change with bearish implications for gold. But the Fed doesn’t worry about inflation and is not going to hike the federal funds rate anytime soon, even when inflation remains above the target for some time. As Powell pointed out, “the economy is a long way from our goals, and it is likely to take some time for substantial further progress to be achieved.” Thus, gold bulls may sleep peacefully .Implications for GoldIndeed, they can relax with Mr. Powell on guard. The Fed Chair has reiterated during his press conference that the US central bank is not going to tighten its dovish stance and reduce the quantitative easing:It’s not time to start talking about tapering. We'll let the public know well in advance. It will take some time before we see substantial further progress. We had one great jobs report. It is not enough to start talking about tapering. We'll need to see more data.Uncle Jay and his bedtime stories… about inflation that is only “transitory”. Once upon a time,the PCE inflation [is] expected to move above 2% in the near term. But these one-time increases in prices are likely to have only transitory effects on inflation.Well, sure. Nonetheless, this is the favorite story of central bankers all over the world told to naive citizens. Just wait for the April inflation readings – they will be something! Of course, it is going to be too early to declare persistently higher inflation, but I’m afraid that the Fed may be too carefree about such a possibility.So, in the aftermath of the generally dovish FOMC meeting, the dollar slid yesterday, while the price of gold went up . Gold continued its recovery from the March bottom, as depicted in the chart below. This makes sense: after all, the Fed reiterated that it would maintain its current ultra easy stance for the foreseeable future, despite the fact of acknowledged improved economic outlook.In other words, the Fed’s inaction made the US central bank more dovish given the better economic outlook and higher inflation. The statement’s language about the coronavirus and the economy was more optimistic, but inflation was considered to be transitory and no hawkish actions were signaled. So, the recent FOMC meeting should be positive for the gold prices from the fundamental point of view , although gold may continue its recent, generally lackluster performance for a while. Of course, the expansion of Fed’s accommodative monetary policy would be much better for the yellow metal, but the lack of any hawkish signals could still clean the room for gold for further upward moves.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
One More Day of Hesitation?

One More Day of Hesitation?

Monica Kingsley Monica Kingsley 30.04.2021 16:18
Stocks reached for new ATHs but got slammed down only to recover next. VIX doesn‘t provide a picture of calmness really even though the put/call ratio seems still uneventful, and credit markets leaning risk-on. The Fed naturally didn‘t draw any hawkish cards on Wednesday to disconcert the markets, yet they‘re throwing a fit a day later, starting from equities, bonds, all the way to precious metals.One would have said that as:(…) The Fed won‘t simply remove the punch bowl, let alone discuss removing it, and will keep repeating the transitory inflation mantra ad nauseam. The ingredients are in place for a continued upswing in stocks and commodities. But stocks are questioning that in today‘s premarket session, in spite of nominal yields not exerting a real pressure on the sensitive S&P 500 sectors. Technology has recovered from an intraday plunge, and semiconductors (XSD ETF) didn‘t lead lower in any way. The defensives had a good day really while the usual suspects (value, cyclicals) benefiting from rising yields, did great – even though long-dated Treasuries (TLT ETF) almost closed the bearish gap.Treasuries though took their toll upon gold – the nominal yield going up did bite, even though inflation expectations rose in tandem, and not at all hesitantly. It‘s as if the market place didn‘t deem inflation at the moment too high, i.e. as if real rates were actually rising (those believing so are in for a surprise). Personally, I find it odd that the transitory inflation story is still getting some ear, and wonder when last have the lumber, oil, copper, iron, nickel, zinc, corn, soybean (and soon also coffee) prices been checked.Dollar bulls, remember:(…) we‘re in the decade of precious metals and commodities super bull runs – and these are well underway. The debasement of fiat currencies against real assets is set to continue, and will accelerate given the unprecedented fiscal and monetary support already and ahead – sorry dollar bulls, the greenback declines are resuming.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookStocks made the move, were rebuffed, and returned. Some backing and filling would be hardly surprising though.Technology and FinancialsTechnology recovered from steep intraday losses, and their chart doesn‘t look to be breaking down. $NYFANG isn‘t in a decline mode, and your typical defensive sectors scored strong gains yesterday. And as the sectors usually embracing rising rates did well, chances are yesterday‘s S&P 500 setback would shortly be forgotten.Inflation ExpectationsInflation expectations are rising again, and so do the Treasury yields. These aren‘t frontrunning expectations by much, but the brief respite in the bond market surely seems to be about over.Gold, Silver and MinersGold yet again caught a bid, and recovered a good portion of intraday losses. The buyers stepped in but given the lull in the nominal yields drawing to its end, seeing gold mirroring the rise in yields is disconcerting. On the other hand, copper consolidated on the day, and thus didn‘t counter the Treasuries effect.While gold is under short-term pressure and well bid, miners had a worse day, and didn‘t outperform the yellow metal. It‘s only within GDX that the chart is more optimistic – not within HUI. Talking silver, it‘s actually good the metal didn‘t move at all on the day – in spite of the challenging setup, the precious metals appear to be making a low.SummaryThe S&P 500 is still meeting headwinds, remaining vulnerable to more backing and filling. The bullish signs are still there, but not getting all the short-term follow through (HYG, IWM, EEM), and it looks that closing at new ATHs won‘t happen today. Patience.Gold and miners are likely making a bottom here, in spite of inconclusive HUI performance. Silver resilience along with base metals is tipping the scales towards maintaining even the very short-term bullish outlook – let alone the medium-term one. The next upswing is approaching.
Gold Sings a “Hot N Cold” Song

Gold Sings a “Hot N Cold” Song

Finance Press Release Finance Press Release 30.04.2021 18:18
Although spring has begun, we can still find ourselves in winter, or even summer. Gold may benefit from such a seasonal aberration.Oh, how wonderful, spring has finally started, hasn’t it? We have April, after all. Well, in calendar terms, it’s indeed spring, but economically it can be summer already or still the beginning of winter. How so? I refer here to Kondratiev cycles (also known as Kondratieff cycles or Kondratyev cycles).As a reminder, Nikolai Kondratiev was a Russian economist who noted in the 1920s that capitalist economies experience long super-cycles, lasting 40-60 years (yup, it’s not a very precise concept). His idea was that capitalism was not on an inevitable path to destruction, but that it was rather sustainable and cyclical in nature. Stalin didn’t like this conclusion and ordered a prison sentence and, later, an execution for Kondratiev. And you thought that being an economist is a boring and safe profession!The Kondratiev cycles, also called waves, are composed of a few phases, similar to the seasons of the year. In 2018, I defined them as follows:Spring : economic upswing, technological innovation which drives productivity, low inflation , bull market in stocks, low level of confidence (winter’s legacy).Summer : economic slowdowns combined with high inflation and bear market in stocks, this phase often ends in conflicts.Autumn : the plateau phase characterized by speculative fever, economic growth fueled by debt, disinflation and high level of confidence.Winter : a phase when the excess capacity is reduced by deflation and economic depression, debt is repaid or repudiated. There is a stock market crash and high unemployment rate , social conflicts arise.However, other economists define these phases in a slightly different manner. For them, spring is an inflationary growth phase, summer is a period of stagflation (inflationary recession ), autumn a deflationary growth period, while winter is a time of deflationary depression.So, which phase are we in? That’s a very good question. After all, the whole concept of Kondratiev cycles is somewhat vague, so it’s not easy to be precise. But some experts believe that we are likely in the very early part of the winter after a very long autumn . Indeed, there are some important arguments supporting such a view.First, we have been experiencing a long period of disinflation (and later just low inflation), a decline in the bond yields , and economic growth fueled by debt. I refer here to the time from the end of the Great Recession until the Covid-19 pandemic , but one can argue that autumn lasted since the early 1980s, when both interest rates and inflation peaked, as the chart below shows.Second, winter is believed to be a depression phase with stock and debt markets collapsing, but with commodity prices increasing. And this is exactly what we are observing right now. I refer here to the rally in several commodity prices. This is at least partially caused by the disruption in the supply chains amid the epidemic in the U.S. and worldwide pandemic, but if the bull market in commodities sets in for good, this could be a negative harbinger for the stock market. After all, more expensive raw materials eat into corporate profits.Third, winter is thought of as a period that tears the social fabric of society and deepens the inequalities. The data is limited, but the coronavirus crisis has been one of the most unequal in modern U.S. history, as its costs have been borne disproportionately by the poorer parts of society that have been unable to work online.So, “winter is coming” may be a belated warning, as winter could have already begun. Later during this period, we could see bankruptcies of firms and financial institutions, and even some governments, as a delayed consequences of the coronavirus crisis. This is bad news for the whole of Westeros and its economy, but good for gold. Investors who don’t like the cold should grab a golden blanket to hedge them from the winter.However, in 2018, I expressed the opinion that summer may come in the 2020s, as the debts are rising and the inflationary pressure is growing:As the global economy recovered and now expands, inflation is low, while stocks still rally, we enjoy spring. This is why gold has remained in a broad sideways trend in the last few years. However, as we are on the edge of the next technological revolution, confidence is finally rising and there are worries about higher prices, and we could enter the summer phase in the not-so-distant future.And I still believe that my opinion makes sense. Indeed, after the global financial crisis of 2007-9, we have seen several spring features: low inflation, a bull market in stocks, and a low level of confidence (after all, there was “the most hated rally in the stock market”), which was a legacy of winter, i.e., the collapse of Lehman Brothers and the following economic crisis .And summer is generally a period of stagflation, which is exactly what I’m expecting. You see, after a strong economic recovery in the nearest quarters, the U.S. economy is likely to return to a mediocre pace of economic growth, but with much higher inflation. After all, there is strong monetary and fiscal stimulation ongoing right now, another feature of summer. Meanwhile, winter is generally a deflationary period, so the specter of inflation rather suggests that summer may be coming and investors should hedge themselves against waves of gold.Luckily, gold offers its protection not only against winters, but also against summers . Indeed, gold performs the worst during autumns, when there is disinflation, like in the 1980s and the 1990s, and the best during winters (due to the economic crisis – remember the 2000s?) and the summers (due to high inflation – remember the 1970s?).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 a 7-day no-obligation trial for all of our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
Taper Smoke and Mirrors

Taper Smoke and Mirrors

Monica Kingsley Monica Kingsley 03.05.2021 15:03
Once in a while, stocks closed in red – is that a reversal or the most the bears could hope for these days? Thursday‘s hanging man got its follow through, yet the bulls staged a rebound into the close. Perhaps that‘s as good as the selling pressure gets, for I think the path of least resistance is still higher in S&P 500.If you look at the VIX or the put/call ratio, Friday‘s setback is readily apparent, and stocks seem ripe for an upswing now. Fed‘s Kaplan did its job s with the taper talk, yet I think he played the bad cop part – the Fed will really act ostrich in the face of not so transitory inflation, for as long as the Treasuries market doesn‘t throw a tantrum.And the 10-year yield has been quite well behaved lately, closing at 1.65% only on Friday. The April calm seems to be over, and I‘m looking for the instrument to trade at 1.80% at least at the onset of summer. Then, let‘s see how the September price increases telegraphed by Procter & Gamble influence the offtake – will the price leader be followed by its competitors? That‘s one of the key pieces of the inflation stickiness puzzle – and I think others will follow, and P&G sales and profitability won‘t suffer. The company is on par with Coca Cola when it comes to dividends really.Once there, we would progress further in the reflation cycle when inflation is no longer benign and anchored. We‘re though still quite a way from when the Fed tries to sell rising rates as proof of strengthening economic recovery – once the bond market would get to doubt this story though, it would be game over for its recent tame behavior.Friday‘s retreating Treasuries though didn‘t lift gold, and neither helped miners – it‘s not that inflation expectations would be sending a conflicting signal, as these slightly receded too. Inflation at the moment is probably still too low for the complacent market lulled to sleep by the transitory story, but look for that to change.Once the reality of modern monetary theory driven spending in eternity does result in higher inflation biting into real rates even more, the below quote would need to be updated:(…) It‘s as if the market place didn‘t deem inflation at the moment too high, i.e. as if real rates were actually rising (those believing so are in for a surprise). Personally, I find it odd that the transitory inflation story is still getting some ear, and wonder when last have the lumber, oil, copper, iron, nickel, zinc, corn, soybean (and soon also coffee) prices been checked.The taper story being revealed for a trial baloon that it is, would quickly reverse Friday‘s sharp USDX gains, where particularly the USDJPY segment is worth watching. In the end, the debasement of fiat currencies against real assets would continue, and accelerate as the dollar goes fully onto strategic defensive in 2H 2021 again.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookStocks declined, volume remained elevated – so is this the start of a downswing, or rather its closing stage? In spite of weak smallcaps and emerging markets, it‘s the latter – thanks to the credit markets, including emerging market ones.Credit MarketsIt‘s the high yield corporate bonds intraday recovery that appears key here, for the junk bonds joined the investment grade ones and long-dated Treasuries. The dip is being bought in the credit markets.Technology and FinancialsTechnology recovered from steep intraday losses, and so did $NYFANG. To complete the picture, value stocks were out of the daily favor too.S&P 500 Market BreadthIt‘s not just the advance-decline line or advance-decline volume to pay attention to right now, but the new highs new lows too. All three indicate that we are nearing a local bottom.Gold and Miners Short-TermGold is quite holding up, yet not totally convincingly, especially when miners are examined. This setup screams danger as the retreating nominal yields were ignored on Friday. But...Gold and Miners Long-TermThe copper to 10-year Treasury yield isn‘t breaking lower, and neither is gold. The stage is set for the yellow metal (and silver naturally too) to catch up and start outperforming the commodities, especially in the 2H of 2021. The miners to gold ratio‘s posture is curious to say the least. Is it a fake breakdown along the late Mar lines, or it it attempting to lead lower in earnest? The 2018 and 2019 gyrations are more applicable than the uniquely deflationary corona crash in my view – but the miners need to turn higher and lead relatively shortly to confirm.Crude OilCrude oil quite steeply declined on Friday, but the daily downswing doesn‘t have the characteristics of a reversal. The post-correction pattern of higher highs and higher lows remains intact, and black gold is like to return to scoring gains shortly.BitcoinSuch was the Bitcoin chart on Sunday when I tweeted about this go long opportunity. Since then, prices have risen to almost $59,000 as we speak. The uptrend is reasserting itself, but might take a while longer before the Bollinger Bands‘ upper border is reached.SummaryThe S&P 500 is probably almost done meeting headwinds, and the risk-on trades are likely to return before too long – the top of this bull market is still far away.Gold and miners need to prove themselves – especially the miners. With gold holding $1,760 and miners rebounding, the benefit of the doubt given to the precious metals upswing, would be justified – this precious metals upleg is quite well established already.
Will Biden Build Back Better… Gold?

Will Biden Build Back Better… Gold?

Finance Press Release Finance Press Release 04.05.2021 13:22
New spending is coming! And because of that, Biden’s speech to Congress was fundamentally positive for gold.Last week was full of big events. The FOMC released its newest statement on monetary policy meeting, while Powell held the press conference. On the same day, President Joe Biden made his first speech to Congress . Let’s take a look at his words.First of all, Biden laid out his American Jobs Plan , which proposes more than $2 trillion to upgrade US infrastructure and create millions of jobs. No matter that infrastructure spending has no stimulus effect, according to economic research .Second, if you think that $2 trillion is a lot of money, given America’s huge indebtedness, you are clearly wrong. Two trillion is practically nothing and definitely not enough, so Biden proposed another $1.8 trillion American Family Plan in investments and tax credits to provide lower-income and middle-class families with inexpensive childcare.Third, Biden understands that all these expenditures cannot be funded solely by increasing already huge fiscal deficits (see the chart below) and issuing new bonds.So, he proposed a hike in tax rates:It’s time for corporate America and the wealthiest 1% of Americans to pay their fair share. Just pay their fair share (…) We take the top tax bracket for the wealthiest 1% of Americans –those making $400,000 or more – back up to 39.6%.No matter that corporate taxes are implicit taxes on labor and that the current proposals for tax hikes are unlikely to fund the White House’s ambitious plans.Biden also proposed several reforms of the labor market: a 12-week paternal leave for families and an increase of the minimum wage to $15 an hour.So, in short, his speech called for several bold economic policies aiming to increase government spending and strengthen the American welfare state. Sounds good… for gold.Implications for GoldWhat does the Biden speech, and more generally his economic agenda, imply for the precious metals market? Well, it seems that the President cares not only about the workers, but also about the gold bulls. His plan is fundamentally positive for the yellow metal . After all, Biden wants to further increase government spending, which will weaken the long-term pace of economic growth and add to the mammoth pile of the public debt .There are also hints that this massive government spending flowing directly to the citizens could ignite inflation . After all, the US economy has already recovered from the pandemic recession , at least in the GDP terms, as the chart below shows. So, Biden’s economic agenda risks that the economy will overheat igniting inflation.He also adopted a more confrontational stance toward China, which could elevate the geopolitical worries and increase the demand for safe-haven assets such as gold .Another potential benefit is the proposal to raise corporate taxes, which is clearly negative for the US stock market and the greenback . Hence, gold could gain at their expense, especially if we see a pullback in the equity market…Last but not least, the increase in the minimum wage, and other labor market reforms, will not help in a quick employment recovery, so the Fed will maintain its dovish policy for longer. Indeed, we should look at Biden’s message together with the Fed’s signals. Biden proposed trillions of dollars in new spending, while Powell reiterated no hurry to raise interest rates . What a policy mix! We have both easy monetary policy and loose fiscal policy , a golden policy mix , indeed.Gold didn’t react strongly to these events, which is a bit disturbing, but this can be explained by the gains on Wall Street, as investors felt reassured that a financial bonanza would last undisturbed. So, the economic confidence remains high, but if it wanes, especially if inflationary threats come to the surface, gold may perform better.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
SPX Correction Arriving or Not?

SPX Correction Arriving or Not?

Monica Kingsley Monica Kingsley 04.05.2021 16:26
One more day of upside rejection in S&P 500, in what is now quite a long stretch of prices going mostly sideways. As unsteady as VIX seems at the moment, it doesn‘t flash danger of spiking in this data-light week, and neither does the put/call ratio. As I wrote yesterday about the selling pressure, these tight range days accompanied by 30-ish point corrections is as good as it gets when the Fed still has its foot on the accelerate pedal. Yes, you can ignore the Kaplan trial baloon (have you checked when he gets to vote on the FOMC?) that spiked the dollar on Friday but didn‘t put all that a solid floor before long-dated Treasuries as seen in their intraday reversal. Highlighting the key Treasury, inflation and reflation thoughts of yesterday, as these are still here to power stocks higher:(…) the 10-year yield has been quite well behaved lately, closing at 1.65% only on Friday. The April calm seems to be over, and I‘m looking for the instrument to trade at 1.80% at least at the onset of summer. Then, let‘s see how the September price increases telegraphed by Procter & Gamble influence the offtake – will the price leader be followed by its competitors? That‘s one of the key pieces of the inflation stickiness puzzle – and I think others will follow, and P&G sales and profitability won‘t suffer. The company is on par with Coca Cola when it comes to dividends really.Once there, we would progress further in the reflation cycle when inflation is no longer benign and anchored. We‘re though still quite a way from when the Fed tries to sell rising rates as proof of strengthening economic recovery – once the bond market would get to doubt this story though, it would be game over for its recent tame behavior.Gold market enjoyed its fireworks, aided mightily by the silver squeeze run. The inflation theme is getting rightfully increasing attention, and commodities are on the run across the board. Just check yesterday‘s oil analysis or the bullish copper calls of mine. I could just as easily say that copper is the new gold – it has been certainly acting as one over the past many months, yet the yellow metal‘s time in the limelight is about here now. And don‘t forget about silver bring you the best of two worlds – the monetary and industrial applications ones.When it comes to USD/JPY support for the unfolding precious metals upswing, we indeed got the reversal of Friday‘s USD upside:(…) The taper story being revealed for a trial baloon that it is, would quickly reverse Friday‘s sharp USDX gains, where particularly the USDJPY segment is worth watching. Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe declining volume tells a story of not enough conviction to go higher or lower – the market remains vulnerable to brief spikes either way such as those seen and covered in both today‘s intraday Stock Trading Signals.Credit MarketsAs inconclusive intraday the corporate credit markets may seem, the pressure to go up is there, regardless of the high yield corporate bonds reversal. Long-dated Treasuries aren‘t standing in the way but it must be noted that these have given up their intraday upswing completely, and opened with no bullish gap.Technology and FinancialsTechnology lost the advantage of higher open, and wasn‘t helped by the poor daily $NYFANG performance. At the same time, value stocks continued higher but gave away a portion of intraday gains. The markets are on edge, and a bigger move this or more likely next week, shouldn‘t come as a surprise.Smallcaps and Emerging MarketsThe Russell 2000 turned higher on Monday, and emerging markets seem waiting for more signs of dollar weakness. Overall, the U.S. indices still continue outperforming the international markets.Gold and Miners Short-TermVolume returned into the gold market, and so did miners‘ outperformance. While these didn‘t close anywhere near their mid-Apr highs unlike gold, they had extremely undeperformed on Friday – what happens over the next few sessions would provide clue as to whether strength genuinely returned yesterday.Gold and Miners Long-TermThe copper to 10-year Treasury yield is edging higher again, and the miners to gold ratio strongly rebounded, proving my yesterday‘s point that the real parallels are the 2018 and 2019 gyrations, not the uniquely deflationary corona crash.SummaryThe S&P 500 remains vulnerable to short-term spikes in both directions, but the medium-term picture remains positive – the strong gains since late Mar are being worked off here before another upswingGold and miners proved themselves yesterday, and scored strong gains in a universally supportive array of signals across commodities, Treasuries, and also the USD/JPY daily move. Well worth not retiring the benefit of the doubt given to the precious metals bulls – more gains are in sight.
Janet Smoke and Mirrors

Janet Smoke and Mirrors

Monica Kingsley Monica Kingsley 05.05.2021 15:44
Weak overnight trading gave way to tepid European session with a predictable buying interest at the U.S. open - which fizzled out though after a few minutes. The tight range consolidation of late gave way to heavy selling as Janet Yellen talked rate hikes and inflation. Friday‘Kaplan trial baloon, and now this – she walked back her statement in the aftermarket, and stocks kept recovering since. Even the VIX upper knot doesn‘t look so spooky anymore, but the options traders aren‘t convinced. But how many such headline shocks have we seen recently? Capital gains tax plans, anyone? See how the market did next, shaking off the shock and rising on the Fed‘s continued liquidity wave next. Watch what they do, not what they say – and for now, the ingredients are still in place for further stock gains, and I made a good decision to buy yesterday‘s dip on signs of intraday stabilization.Even long-dated Treasuries dialed back their gains and inflation expectations receded on this perceived readiness to take that pesky „transitory“ inflation seriously. The dollar though had a hard time reversing Monday‘s losses that were virtually guaranteed once the 2021 mini-taper tantrum played out on Friday in currencies. The big picture is still the same – we‘re still living the good reflation, and even if it doesn‘t miraculously rekindle lasting inflationary flames, the print & spend magic recipe will be tried again until it does.Gold rose on the S&P 500 selloff only to reverse lower, but has anything materially changed? Miners keep doing better – they declined less, and the volume wasn‘t just there to the same extent as with the yellow metal.And the other commodities? I‘m known for incessantly beating the copper bullish drum, and also the oil one, and here we are with further gains added since my latest oil analysis. Silver might pull back a little here, but look for it to mirror the insatiable appetite for base metals and other commodities. Beyond the Green New Deal mandates, the monetary demand is set to help power the white metal higher.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookQuite a steep increase yesterday, and more upside price action returning SPX back into the range over the coming days, is needed to fix that dicey look in the daily indicators. Nothing unimaginable in this data-light week (don‘t look at non-farm payrolls), unless a black swan arrives. No signs thereof in the credit or currency markets, luckily.Credit MarketsPlunging in line with stocks, junk corporate bonds made an intraday recovery on high volume – their dip was also bought. And as the investment grade bonds maintained their opening gains as much as long-dated Treasuries did, the stage is being set for stocks to shake off yesterday‘s plunge.Technology and ValueHas technology found the bottom, or not? Semiconductors (XSD ETF) aren‘t overly positive, and a similar statement can be made about $NYFANG performance. Tech didn‘t join in much sturdier moves across the defensives, and didn‘t welcome retreating rates the way it used to earlier. Value stocks are the ones to rely upon as even financials (XLF ETF) rose on such a TLT move – but stellar S&P 500 gains require both parts of the stock universe to do well simultaneously.Gold and Miners Short-TermGold and miners need to stand their ground, and return to gains. It looks that miners would once again lead the yellow metal higher, now that nominal yields are biting less, and USD/JPY isn‘t exerting pressure.Gold and Miners Long-TermGold is struggling to overcome $1,800 for a few weeks already, but both the black lines shown in the above chart, support the eventual break higher. I assume that when that comes, it would just leave the bears in the dust.SummaryS&P 500 looks ready to continue its gradual recovery, and take on the all time highs next. A key enabler would be the tech heavyweights no longer standing in the way – tentative signs of their local bottom are appearing.Gold and miners suffered a minor setback yesterday, and the signals from related markets continue supporting further gains in spite of prolonged hesitation in the yellow metal lately.
Lumber and Copper Are Surging. Will Gold Join the Party?

Lumber and Copper Are Surging. Will Gold Join the Party?

Finance Press Release Finance Press Release 06.05.2021 15:47
There’s no inflation … None at all. Only, completely by accident, lumber prices are skyrocketing. Gold is likely to remain silent, but it may catch up later.The rise in lumber prices can be seen in the chart below:What a surge! It happened because of the limited supply and strong demand for new houses. But it’s not just lumber. Many raw commodities are rallying too. The price of copper, for example, has just approached its record height (from February 2011), as the recovery of the global economy boosted demand. Just take a look at the price below.Indeed, the trend is up. Commodity prices are on the rise as a whole as the chart below clearly shows. Even Warren Buffet warned investors against a “red hot” recovery, saying that his portfolio companies were “seeing very substantial inflation” amid shortages of raw materials.Of course, commodity price inflation and consumer price inflation are quite different phenomena, as consumers don’t buy lumber or copper directly but only finished products made from these materials. However, at least part of this producer price inflation may translate into higher consumer prices, as producers’ ability to pass higher costs on consumers has recently increased – people have a large holding of cash and are willing to spend it.Implications for GoldWhat do rallying commodity prices imply for the precious metals? Well, rising commodity prices signal higher inflation, which should increase the demand for gold as an inflation hedge . Of course, there might be some supply disruptions and bottlenecks in a few commodities. However, the widespread character and the extent of the increase in prices suggest that monetary policy is to blame here and that inflation won’t be just transitory as the Fed claims.What’s more, the commodity boom is usually a good time for precious metals . As the chart below shows, there is a strong positive correlation between the broad commodity index and the precious metals index.There was a big divergence during the pandemic when commodities plunged, while gold at the same time shined brightly as a safe-haven asset . So, the current lackluster performance of the yellow metal is perfectly understandable during the economic recovery.Indeed, the rebound in gold has been weak, and gold hasn’t even crossed $1,800 yet, although it was close this week, as the chart below shows.There was a rally on Monday (May 3) amid a retreat in the US dollar, but we were back in the doldrums on Tuesday, amid Yellen’s remarks about higher bond yields . She said that interest rates could rise to prevent the economy from overheating:It may be that interest rates will have to rise somewhat to make sure that our economy doesn't overheat, even though the additional spending is relatively small relative to the size of the economyHowever, Yellen clarified her statements later, explaining that she was not recommending or predicting that the Fed should hike interest rates. Additionally, several FOMC members made their speeches, presenting the dovish view on the Fed’s monetary policy . For example, Richard Clarida, Fed Vice Chair, said that the economy was still a long way from the Fed’s goals and that the US central bank wasn’t thinking about reducing its quantitative easing program .Anyway, the price of gold has been trading sideways recently as it couldn’t break out of the $1,700-$1,800 price range. This inability can be frustrating, but the inflationary pressure could help the yellow metal to free itself from the shackles. The bull market in gold started in 2019, well ahead of the commodities. Now, there is a correction , but gold may join the party later . It’s important to remember that reflation has two phases: the growth phase when raw materials outperform gold and the inflation phase when gold catches up with the commodities. So, we may have to wait for a breakout a little longer, but once we get it, new investors may flow into the market, strengthening the upward move.If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Gold & the USDX: Correlations

Trade ideas for the week of May 10-14

Kseniya Medik Kseniya Medik 07.05.2021 10:03
The week will be full of US data: inflation, jobless claims, retail sales, and some other reports. They will have a huge impact on the currency pairs with the US dollar and also gold. Inflation is the main topic of traders’ talks these days as it is getting closer to the levels unseen in 14 years, but the Fed tries to assure investors that inflation will stay at these heights just for a short period. However, market participants do not fully trust these words and watch closely for Fed’s actions, when it will start tapering: cut asset purchases or hint about raising interest rates. When it happens, it will send the US dollar soaring.EUR/USDThe economic situation is getting better in the Euro Area. Increasing vaccinations and plans to ease travel restrictions can push EUR/USD higher to April highs of 1.2150. Besides, any progress on the EU Recovery Fund should positively impact the euro as well this quarter. USD/CADThe Bank of Canada was the first bank to tighten the policy after the pandemic crisis. The Canadian dollar gained on that hawkish move. Thus, USD/CAD is going down and down. Besides, the CAD was supported by rising oil prices as Canada is one of the world’s largest exporters. Sooner or later the pair may hit the psychological level of 1.2000.DisneyThe earnings season is coming to an end! Walt Disney is one of the latest to deliver it earnings results. They will be out on May 13 at 23:30 FBS Trader time (GMT+3). The forecast is $0.27 per share. If the actual data beats the market estimate, Disney will surge. Otherwise – drop. Besides, Disney is trading at the local lows at the moment of writing, thus if earnings are strong, it will push the stock up with a greater force.XBR/USDXBR/USD is the UK Brent crude oil. It has been moving gradually up these days, driven by the easing of travel restrictions and the global economic recovery. Some analysts are even talking about oil hitting $80.00 a barrel, but it should break the $70.00 resistance at first and rising cases in India may cap gains.Download the FBS Trader app to trade anytime anywhere! For personal computer or laptop, use MetaTrader 5!
Ready for More Hot Gold and Stocks Profits

Ready for More Hot Gold and Stocks Profits

Monica Kingsley Monica Kingsley 07.05.2021 16:22
One final attempt to go down before reversing to strong gains all the way to the closing bell – the S&P 500 returned to trading back at the upper border of its prolonged consolidation range. Again at 4,200, new ATHs are back in sight – that‘s at least what the impression from declining VIX says, and the option traders might disagree here all they want, they‘re likely to be the next cannon fodder in the bullish advance.Needless to say that my reasonably and justifiably aggressive long positions in both S&P 500 and gold, are innundated with rising profits. Initiated in the vicinity of Tuesday‘s lows, I look for more gains in stocks (we‘ll get to the metals shortly) in spite of smallcaps still lagging behind (don‘t worry, they‘ll catch up over time, and I will cover that), and precisely because emerging markets are rejoicing over further dollar woes. Yes, the glitzy and fake tightening show is officially over since I first vocally called for it in Monday‘s analysis.Keep an eye on the big picture presented yesterday:(…) no change in the reflationary positive dynamics for stocks, let alone the red hot commodities. These (copper, agrifoods, base metals, lumber, oil) continue appreciating in spite of nominal yields pulling back a little these days. Make no mistake though, deflation isn‘t about to break out. Lower yields finally coincided with (supported) the defensive sectors the way it ideally should – technology bottom searching is over, Dow Jones Industrial Average is spurting higher, utilities recovered, and consumer staples continued upwards as if nothing happened at all. Maybe is this heavy on P&G sector placing faith in the market leader‘s pricing power to result in a success once September arrives with the rest of crowd following? That‘s the part of the cost-push inflation I discussed on Monday. I truly hope that people are paying attention, and don‘t put all their eggs into e.g. the dollar basket when it comes to commodities:(…) the USD Index … anticipated downside move ... would help lift international markets, and is also part of the explanation behind the strong commodity performance these days. This CRB Index move is key, and shows how far have real assets progressed in shaking off the dollar link – if you compare the dollar‘s value in early Feb and now, you are looking at very meaningfully higher commodity prices over that same time period.Gold and silver fireworks arrived, and more is to come! What a better proof than a broad based advance across the sector, starting with both metals, and extending to gold and silver miners left and right. Not to mention the copper fires burning brightly – if you were listening to my incessant red metal bullish calls, you‘re very happy now. And just as in the precious metals, there is more to come here too. So happy for all you who had the patience to wait out a couple of adverse sessions, because:(…) The key metrics such as nominal or real yields support the precious metals rebound increasingly more – don‘t be fooled, gold would break above the $1,800 resistance, whether you look at it as a purely psychological one, or as a neckline of an inverse head and shoulders on the daily chart. The advance across the real assets, the precious metals and commodities super bull, would be more well rounded then. As for Bitcoin, such was my yesterday‘s (still valid) assessment in a series of updates of the leading, but currently lagging crypto when compared to Ethereum or Dogecoin, the latter being a true middle finger to the financial system. GameStop, silver squeeze, Doge...Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookYesterday‘s rebound happened on rising volume, lending it credibility for the sessions to come. The bears weren‘t obviously convinced enough to sell as yesterday‘s volume lagged behind Tuesday‘s one.Credit MarketsThe corporate credit markets kept yesterday and still keep today signalling higher stock prices next. Notably, both HYG and LQD rose again in spite of long-dated Treasuries turning up as well.Technology and ValueTechnology did indeed bottom, and the heavyweights contributed reasonably enough to its advance. Semiconductors could have fared a little better, but that‘s not a major issue. At the same time, value stocks continued their steep ascent, as reliably as ever.S&P 500 Market BreadthThe S&P 500 advance wasn‘t accompanied by either new highs new lows or the advance-decline line turning up noticeably. Might be disappointing at first sight, but the overall impression is still of a healthy and quite broad advance.Gold and Miners Short-TermMiners and gold are in tune with each other, jointly pulling the cart of the precious metals advance. No further words are necessary here, I believe.Gold, Silver and Miners Long-TermJust as strongly when I doubted the miners to gold plunge on Monday, the ratio swiftly recovered starting Tuesday and extending gains yesterday. Please note silver springing to leadership position again – gradually first, more obviously throughout this week on the silver squeeze heels, which would be a volatile ride, but once again, silver is the best of both worlds – the monetary and industrial applications ones.Crude OilCrude oil pulled back a little yesterday, but the series of higher highs and higher lows since April hasn‘t been violated. The table remains set for further gains, and the only question is how fast these come – I‘m standing by my calls for at least $80 West Texas Intermediate before 2022 is over. Seasonality is still good for black gold, so enjoy the ride!SummaryS&P 500 is readying another reach for the highs, finally supported (a ka not being hampered by) technology. Risk on is returning and high beta stock markets pockets are expected to keep doing well. Gold, silver and miners have firmly positioned themselves to extend yesterday‘s much awaited and well deserved gains. The upleg is just getting started, now that the few weeks‘ consolidation is over.
Inflation Knock-knock-knockin’ On Golden Door

Inflation Knock-knock-knockin’ On Golden Door

Finance Press Release Finance Press Release 07.05.2021 16:43
Inflation is not coming. It is already here! Gold should benefit, given that it could be higher and more lasting than the pundits believe.“Knock, knock, knockin’ on heaven’s door”, so sing Bob Dylan and Guns N’ Roses. Now, inflation is knocking on the golden door. According to the BLS , the U.S. CPI inflation rate recorded a monthly jump of 0.6% in March, while soaring 2.6% on an annual basis. And the core inflation has also accelerated. So, inflation has significantly surpassed the Fed’s target of 2% , as one can see in the chart below.And remember that this is what the official data shows, which rather underestimates the true inflation. This is because of several issues, including hedonic quality adjustments, shifts in the composition of the consumer baskets and methodological changes. It is enough to say that the rate of inflation calculated by the John Williams’ Shadow Government Statistics that uses methodology from the 1980s is over 10% right now.There are some controversies about this alternate data, but I would like to focus on something else. The CPI doesn’t include houses (or other assets) into the consumer baskets, as they are treated as investments. The index only takes rents into account. But homeowners don’t pay rents, so for them, the cost of shelter, which accounts for about one-fourth of the overall CPI, is the implicit rent that owner-occupants would have to pay if they were renting their homes. And this component rose just 2 percent in March, while the Case-Shiller Home Price Index, which measures the actual house prices, soared more than 11% in January (the latest available data). According to Wolf Street , if we had replaced the owners’ equivalent rent of primary residence with the Case-Shiller Index, the CPI would have jumped 5.1 instead of 2.6%. The chart below shows the difference between these two measures.Hence, inflation has come, and even the official data – which can underestimate the level of inflation that ordinary people deal with in their daily lives – confirms this. If you’ve been buying food lately, you know what I mean. Now, the question is whether this inflation will be temporary or more lasting.Powell , his colleagues and the pundits claim that higher inflation will only be a temporary phenomenon caused by the base effect. The story goes like this: the CPI plunged in March 2020, which created a lower base for today’s annual inflation rate. There is, of course, a grain of truth here. But let’s take a look at the chart below. It shows the CPI, with both March 2020 (red line) and February 2020 (green line) as a base. As you can see, in the latter case the index jumped 2.3%. Yes, lower, but not significantly lower than 2.6% when compared to March 2020. So, the Fed shouldn’t blame the base effects for accelerating inflation (and funny thing: have you heard the pundits talking about the base effect when they were talking about vigorous GDP recovery?).Instead, central bankers should blame themselves and their insane monetary policy . After all, as the chart below shows, the Fed’s balance sheet has soared $3.4 trillion (or 81%), while the broad money supply (measured by M2) has increased more than $4 trillion (or 26%) from February to date.They could also blame reckless fiscal policy . Growing government spending, enabled by a rising pile of debts monetized indirectly by the Fed, has headed for Main Street. This, combined with a jump in the broad money supply, is the key change compared to the Great Recession when almost all stimuli flowed into Wall Street and big corporations. Sure, some people use the received money to increase savings and repay debts. But with the reopening economy, some of the pent-up demand will be realized. Actually, many Americans have already started spending free time traveling like crazy after being locked in homes for so long.And this is very important: consumers are therefore more eager to accept higher prices. It shouldn’t be surprising given all the checks they got and how hungry for normal life they are. As I reported last month , companies are reporting rising prices of commodities and inputs (partially because of the supply disruptions too), but so far their power to pass the producer price inflation to consumers has been limited. However, this is changing . The April report IHS Markit U.S. Services PMI observes thatRates of input cost and output charge inflation reached fresh record peaks, as firms sought to pass on steep rises in input prices to clients (…) A number of companies also stated that stronger client demand allowed a greater proportion of the hike in costs to be passed through. The resulting rate of charge inflation was the quickest on record.All these reasons suggest that higher inflation could be more lasting than most of the so-called experts believe (although the officially reported inflation doesn’t have to show it). This is good news for the yellow metal . Higher inflation implies lower real interest rates and stronger demand for gold as an inflation hedge . What is important here is that we have more inflationary pressure in the pipeline exactly at the time when the Fed has become more tolerant of inflation. So, the combination of higher inflation with a passive central bank position sounds bullish for gold . The key issue here is whether the markets believe that the Fed will allow for higher inflation. So far, they have been skeptical, so the expectations of interest rates hikes accumulated and the bond yields rallied. But it seems that the Fed has managed to convince the markets that it’s even more incompetent than it is widely believed. If the distrust in the Fed strengthens, gold should return to its upward trajectory from the last year.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.
What‘s Not To Love About These Great Bull Runs?

What‘s Not To Love About These Great Bull Runs?

Monica Kingsley Monica Kingsley 10.05.2021 14:39
A bit of selling at the open, and off to new highs – the S&P 500 bulls are taking no prisoners. The long recent consolidation has been broken, and it was again to the upside. Option traders are still having a hard time agreeing with the declining VIX, which is pointing to them serving as still some more cannon fodder next in the bullish advance. In fairness though, it can‘t be denied that the average put/call ratio has been rising over the last 3 months.Still, that doesn‘t change the reality that my reasonably and justifiably aggressive long positions in both S&P 500 and gold, are going even more profitable. No problem that the Russell 2000 didn‘t climb as much – emerging markets stepped into the void on account of predictably cratering USD. Friday didn‘t bring any changes to the narratives – the very weak non-farm payrolls weren‘t a selling catalyst in the least. All eyes remain on reopening trades to the effect that value stocks are rising effortlessly whatever the nominal rates direction. In spite of inflation and inflation expectations not being negligible, we‘re in still in the reflationary period where economic growth is higher than either of these two.Not only is the S&P 500 advance a very broad one as evidenced by the number of stocks trading above their 50-day moving average (with tech playing a positive role once again), commodities continue being on fire. Especially the base metals such as copper welcomed the uptick in inflation expectations. With the recent two trial baloons (Kaplan and Yellen), the Fed might be exploring market reactions if it had moved to counter inflation at least to some degree. Hold not your breath though, that would tank the risk-on assets – they won‘t do that any time soon.Gold is making its run, unhampered by nominal yields rising on the day. Miners have continued their advance, and the precious metals upleg offers a sight of health. Note also that the silver miners have been doing overall better than the gold ones throughout the long soft patch starting in Aug 2020, just as silver did. That‘s precisely what to expect in an environment of inflation running hot:(…) Gold and silver fireworks arrived, and more is to come! What a better proof than a broad based advance across the sector, starting with both metals, and extending to gold and silver miners left and right. Not to mention the copper fires burning brightly – if you were listening to my incessant red metal bullish calls, you‘re very happy now. And just as in the precious metals, there is more to come here too.And as the Fed continues playing ostrich when it comes action, commodities including oil continue doing great. While black gold consolidated over the last few sessions, it remains primed to go higher.Bitcoin is also enjoying upside momentum as it aims to clear the 50-day moving average vicinity. Its uptrend is gradually reasserting itself – patience required still. But it‘s the steep gains in other cryptos such as Ethereum making new highs practically on a daily basis, that is catching much attention. ETH/USD looks short-term extended though, and I would prefer waiting for a pullback, especially given the last two candles‘ shape (both having significant knots – today is shaping up to be a day of more upside rejection).Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookWe‘re again at the upper border of the Bollinger Bands, and the daily indicators are constructive with more room to grow. We‘re staring at a positive week ahead.Credit MarketsThe corporate credit markets did waver a little on the day, investment grade bonds more so than the high yield ones, which is understandable given the long-dated Treasuries setback.Technology and ValueTechnology rebound continues, and should so aided by the recent earnings announced. I am not looking for a meaningful dip in $NDX or whichever part of the tech sector over the nearest days as $NYFANG did its job quite well on Friday. Yet again, value stocks continued their steep ascent come hell or high water.Inflation ExpectationsA rare sight indeed – Treasury yields have run behind inflation expectations on Friday.Gold, Silver and MinersGold and miners continue running higher together, and neither gold‘s upper knot nor miners reaching visually escape velocity compared to the yellow metal, is an issue, because copper had a great day.Silver consolidated daily gains, lagging behind both gold and copper. No issues, the white metal has great days ahead still, and Friday‘s session proves that the precious metals upswing is nowhere near overheated.Crude OilCrude oil bulls defended Thursday‘s lows, and the bullish consolidation continues. Look for an upside breakout next as this isn‘t a double top. I‘m standing by my calls for at least $80 West Texas Intermediate before 2022 is over. Seasonality is still good for black gold, so enjoy the ride!SummaryS&P 500 is at new highs, and its ascent is far from over – no signs of a major or even local top to be made. The index will have an easier time now that the short term tech / Nasdaq outlook has flipped bullish as well. Gold, silver and miners continue to be well positioned to reap further gains as the well balanced rally continues. The copper and nominal yields combo balances each other out, so the factors speak for a bullish consolidation in the short term as a minimum.Crude oil is getting ready to resume its upswing in a modest fashion, and I look for its early Mar top to be challenged this or next week.Bitcoin upswing is very gradually reasserting itself, and the bulls would be well advised to pay attention as the 50-day moving average is likely to start sloping upwards perhaps as early as this Friday, thus supporting the prices above the late Apr base.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 all the four publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals and Bitcoin Trading Signals.Thank you,Monica KingsleyStock Trading SignalsGold Trading SignalsOil Trading SignalsBitcoin 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.
The social value of Bitcoin

The social value of Bitcoin

Korbinian Koller Korbinian Koller 11.05.2021 10:14
Immediately you are an outcast from grocery store reward cards and retail loyalty programs. Add those 10-20% increased costs on your food and goods bills in addition to ramped inflation prices, and you are underwater quickly. We have outlived antiquary systems of antisocial payment systems. As such, we see Bitcoin prices further rising based on the apparent fundamental data and a world demanding a more social and more modern way of self-expression and doing business.BTC-USD, Monthly Chart, No bear claw yet:Bitcoin in US Dollar, monthly chart as of May 10th, 2021.It is not only crucial in fundamental data and the underlying story of a market to try to keep it simple but in technical analysis as well. Without clarity in the bigger picture, one shouldn’t attempt to trade smaller time frames. A look at the monthly chart of Bitcoin above reveals its strength within its uptrend.Breaking its range in October last year, a steep uptrend followed. In February this year, Bitcoin seemed running out of steam rejecting prices above US$58,000 only to see another run-up in March. The Doji candlestick formation in April finally gave the trend a pause. Classified as in indecision bar, it still showed some strength, with the lower wick part being, the longer one.The astounding aspect is that we have not seen yet in May the bears to seem to get a strong foot into the door. There has been only a brief dip so far. While the month is still young, for now the bullish indications outweigh a bearish consensus.BTC-USD, Weekly Chart, Another angle confirms:Bitcoin in US Dollar, weekly chart as of May 10th, 2021.Now zooming into the weekly time frame, the market shows no difference. With these extension levels, it is atypical that we see this length of a sideways breather in opposition to a stronger fade of prices and a more bearish dominance.Strong resistance zones are always ideal for some partial profit-taking (red box), and as such, we advocate our quad exit strategy. We wouldn’t take all chips off the table here, though. And we wouldn’t short a bull this strong either.Noteworthy here is the significant price level of US$55,510. Prices closing above or below this price level will determine if we are heading sideways or temporarily further down. BTC-USD, Weekly Chart, The social value of Bitcoin:Bitcoin in US Dollar, weekly chart as of May 10th, 2021. bAnother weekly view unearths more signals of strength:Swiftness and size of the recovery from the temporary dip (red and green line). The Bounce made it back above the 0.618 Fibonacci retracement levels and prices are still trading between 0.5 and o.618.Holding extended levels of the standard deviation of considerable time (dotted lines with the mean near US$31,900)Prices trading within a significant support of a supply zone based on volume transaction analysis (yellow box)We are not saying that a breakout to new all-time highs is imminent. Prices most likely decline from here. We are saying that Bitcoin’s typical normal trading behavior expected strong fade has not matured in its expected time frame. There is inherent strength within the Bitcoin market that make price declines attractive buying opportunities and a continuous sideways movement a warning signal for possible higher trading levels to come within the summer.The social value of Bitcoin:Money is a means to express yourself. Most like cash because it is anonymous, instant, and a practical way to fulfill our wishes and needs. Is it really? Or are we living in a more modern world of electric vehicles and renewable energies? It isn’t entirely untraceable due to its serial numbers, and it is expensive. Cash handling is cumbersome, and any larger business has massive backdoor operations that are a security threat and labor-intensive. It is impractical for long-distance and just old-fashioned, so the planet needs resource-oriented efficient operations in all forms.Bitcoin isn’t just of social value, but it fits its times. It expands the freedom of individual expression, and it is planet-friendly with a low imprint. It is the future.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|May 11th, 2021|Tags: Bitcoin, Bitcoin correction, Bitcoin mining, crypto analysis, crypto chartbook, crypto mining, low risk, quad exit, technical analysis, trading education|0 CommentsAbout the Author: Korbinian KollerOutstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent. Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.
Gold & the USDX: Correlations

Bulls Getting Caught in the Whirlwind

Monica Kingsley Monica Kingsley 11.05.2021 15:49
Seemingly uneventful and tight range day in S&P 500 gave way to extraordinary selling once the 4,220 intraday support broke – extraordinary by recent standards. The bulls obviously have quite some damage to repair before thinking about taking on new highs. Prices have moved back into the prolonged consolidation, in what isn‘t a true breakdown though yet. Neither the smallcaps, nor the emerging markets, let alone S&P 500 fell on sharply rising volume, which speaks in favor of a bad day, chiefly driven by tech (yes, I‘m looking at you, $NYFANG) and weak credit markets. Look at market breadth – new highs new lows stunningly rose yesterday in spite of the 500-strong index losing quite a few dozen points.Classic risk off positioning, if only the defensives as a group did a lot better – but it could have been worse had commodities joined in the melee. They didn‘t, and they are thus the dog that didn‘t bark, detracting credibility from yesterday‘s stock market plunge (unless they catch up next, that is).Both copper and lumber reversed, but won‘t this turn out as another buying opportunity, especially in copper? Little has changed in the reflationary and reopening trades – financials managed to shake off the rising yields easily yesterday. True, VIX and put/call ratio aren‘t painting a picture of calmness, but especially the option traders are positioned a bit too bearishly at the moment. Again, it‘s a question of how long before the tech bottom hunters step in. Make no mistake though, growth is going to keep lagging behind value.Gold, silver and miners are in a vulnerable position even though neither the technical nor fundamental reasons behind their rally changed. The rising yields are a testament of rotation out of stocks into bonds not having worked yesterday, and should commodities such as copper get hurt again, precious metals would land in hot water likely. Thus far though, no sign thereof – the momentum remains with the bulls overall, and higher time frames confirm that.Miners are not flashing outrageous underperformance, merely a modest daily one – the short-term fate of the precious metals upleg will be determined by long-dated Treasuries, copper and should the dollar (or USD/JPY) move, then through the contribution of fiat currencies. Even a brief comparison of the USD Index and the dollar-yen pair reveals though that risk-on is the prevailing move of 2021.Crude oil was less hurt by all the selling yesterday, but should it break below $64 on a closing basis, $62 could very easily come next. The daily indicators have weakened, and the bulls don‘t appear ready to break above $66 next.Cryptos are also in a wait and see mode, yet with noticeably less bearish undertones than black gold. Bitcoin remains choppy around its flat 50-day moving average, and should better return trading above it – no prodding by Ethereum though helps. The bulls are still taking a short-term break.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookS&P 500 suffered a sizable daily setback, and the recent consolidation‘s lows are likely to have to be defended next. Deceleration of the daily declines accompanied by a lower knot ideally would be the first sign that I would be looking for – alongside a positive turn in the credit markets.Credit MarketsCorporate bonds showed no strength relative to long-dated Treasuries, and that doesn‘t bode well for today‘s session. High yield corporate bonds have though still been performing better in April than the two instruments represented by black lines on the above chart, which attests to risk-on being still the environment we‘re in.Technology and ValueTechnology gave up all the gains since Thursday, and $NYFANG broke below its rising blue support line, and the deterioration among the heavyweights continues. Besides tech, $TSLA illustrates that eloquently just like $ARKK. The rotation out of the behemoths is weighing down the index – this is the area where bleeding needs to stop.VolatilityThe VIX open within the body of Friday‘s candle (harami position) didn‘t bode well, and volatility having closed significantly above Friday‘s open, attests to the strength of yesterday‘s move. This spike doesn‘t appear as over yet.Gold, Silver and MinersGold and miners are in a vulnerable position, and consolidation of recent sharp gains would be healthy and desired. The volume in both gold and silver shows the sellers don‘t have enough conviction, and pullbacks remain buying opportunities regardless of the threatening nominal yields move (inflation expectations made a similarly sharp uptick yesterday).The weekly chart shows how little has changed, how minuscule power has been sapped yesterday. The upleg across the precious metals remains alive and well as we aren‘t crashing into a deflation.BitcoinBitcoin reverted back below the 50-day moving average, and neither Ethereum is crashing. The technical outlook is though turning neutral, and the bulls will have to prove themselves. Until prices return back above the blue moving average, Bitcoin remains short-term vulnerable.SummaryS&P 500 got under selling pressure that is showing no signs of abating, yet the weakness remains concentrated in quite a few tech names. Besides these, credit markets aren‘t doing fine either.Gold, silver and miners continue being resilient, and the coming correction would likely be a shallow one. Increasing nominal yields are countered by rising inflation expectations and copper prices, helping to keep the metals out of harm‘s way.Crude oil bulls will have to step up to the plate, and defend the unfolding upsing that‘s threating to crash below the recent lows.Bitcoin is getting sold off today as well, and the bullish to neutral short-term outlook of yesterday, is turning to a neutral one as a minimum.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 all the four publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals and Bitcoin Trading Signals.
Gold Jumps above $1,800. What’s Next?

Gold Jumps above $1,800. What’s Next?

Finance Press Release Finance Press Release 11.05.2021 16:54
Gold jumped above $1,800, and it’s the disappointing jobs data that added fuel to the fire.The gold market is a funny place. On Thursday (May 6), I complained that the yellow metal couldn’t surpass $1,800:The price of gold has been trading sideways recently as it couldn’t break out of the $1,700-$1,800 price range. This inability can be frustrating, but the inflationary pressure could help the yellow metal to free itself from the shackles.And voilà, just later that day, the price of gold finally jumped above $1,800, as the chart below shows. Hey, maybe I have to complain about gold more often?But jokes aside. The move is a big deal, as gold has finally broken above the key resistance level. What’s important here is that the breakthrough wasn’t caused by some negative geopolitical or economic shock, but rather by fundamental and sentiment factors.So, what happened? First, there is a weakness in the US dollar . With global economic recovery progressing, the safe-haven appeal of the greenback is simply vanishing. Another issue here is – and I pointed this out in the Fundamental Gold Report dedicated to the latest ECB’s meeting – that the pandemic in the Eurozone has reached its peak. So, the worst is already behind the euro area, and it can catch up with the US now, supporting the euro and gold against the dollar.Second, the bond yields have been heading lower recently . As one can see in the chart below, the real interest rates have corrected significantly since their peak in March. In early May, the 10-year TIPS yields slid further, returning to almost -0.90 percent.What is noteworthy here, the real interest rates declined more than the nominal interest rates. It resulted from the increase in the expected inflation. Indeed, as the chart below shows, the 10-year breakeven inflation rate jumped in early May . As a reminder, I wrote on Thursday that “the inflationary pressure could help the yellow metal to free itself from the shackles” and this is exactly what happened.Implications for GoldWhat does gold’s jump above $1,800 imply for its future? Well, the crossing of an important obstacle is always a positive development. The decline in the interest rates, coupled with the weakness in the US dollar, means that the markets are convinced that the Fed would remain very dovish, even despite the rising inflation .Other positive news for the gold market is April’s nonfarm payrolls that came in below the forecasts. The US economy added only 266,000 jobs last month (see the chart below), although many analysts and even the FOMC members expected a nearly 1 million increase in employment. Such a disappointment made traders slash the bets on the pace of the Fed’s monetary tightening. A softer expected path of the federal funds rate is a fundamentally positive factor for gold.In other words, the weak employment report relieves a lot of the pressure put on the Fed to tighten its monetary policy. So, the US central bank will continue to provide monetary support, despite all the progress observed in the economy, and that easy stance will stay with us for longer than previously expected. In that sense, April’s disappointing jobs data may be a game-changer for gold, and it could add fuel to the recent rally that started on Thursday.Of course, one weak employment number doesn’t erase the impressive economic recovery. Moreover, I would like to see that gold hold the recent gains through the coming days before organizing a party for the gold bulls. However, it seems that I was right in saying that the second quarter would be much better than the first one. Gold is indeed gaining momentum! And, what’s really important, the yellow metal started to rise amid a strong economic recovery – it implies that we can be observing important, bullish shifts in the market sentiment towards gold.If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Intraday Market Analysis – NASDAQ Tests Bulls’ Commitment

Intraday Market Analysis – NASDAQ Tests Bulls’ Commitment

John Benjamin John Benjamin 12.05.2021 08:39
NAS 100 heads towards important support The tech index retreats as investors continue to rotate out of growth-sensitive stocks. A dead cat bounce to 13800 has met stiff selling pressure, turning the former support into a resistance. The nosedive below the temporary support level at 13400 is an indication that the short side has gained the upper hand. 12880 is a critical support from the daily chart as a bearish breakout could initiate a reversal in the medium term. On the upside, the index may see a limited rebound while the RSI recovers into the neutrality area. EURUSD tests major resistance The US dollar consolidates as traders await inflation data later today. The price is currently hovering under the daily supply zone around 1.2200. A breakout would confirm the bullish MA and put the euro back on track towards 1.24. However, the pair could be vulnerable to the downside as an overbought RSI indicates overextension. 1.2055 is the immediate support should there be a lack of momentum buyers. Further down, 1.1990 near the 30-day moving average is a critical level to keep short-term sentiment upbeat. GBPAUD breaks above double top The Australian dollar softens as commodity prices pull back. The pair has been grinding up steadily from its support base at 1.7780. The latest breakout above 1.8060 has shifted the action to the upside after two previous failed attempts. 1.8200, a major resistance level on the daily chart would be the next on the list. Its breach could reverse the pound’s misfortune and turn the thirteen-month-long downtrend around. In the meantime, a retracement on the back of an overbought RSI may meet buying interest around 1.8000.
Intraday Market Analysis – NASDAQ Tests Bulls’ Commitment - 12.05.2021

Intraday Market Analysis – NASDAQ Tests Bulls’ Commitment - 12.05.2021

John Benjamin John Benjamin 12.05.2021 08:41
NAS 100 heads towards important supportThe tech index retreats as investors continue to rotate out of growth-sensitive stocks. A dead cat bounce to 13800 has met stiff selling pressure, turning the former support into a resistance.The nosedive below the temporary support level at 13400 is an indication that the short side has gained the upper hand.12880 is a critical support from the daily chart as a bearish breakout could initiate a reversal in the medium term.On the upside, the index may see a limited rebound while the RSI recovers into the neutrality area.EURUSD tests major resistanceThe US dollar consolidates as traders await inflation data later today.The price is currently hovering under the daily supply zone around 1.2200. A breakout would confirm the bullish MA and put the euro back on track towards 1.24.However, the pair could be vulnerable to the downside as an overbought RSI indicates overextension. 1.2055 is the immediate support should there be a lack of momentum buyers.Further down, 1.1990 near the 30-day moving average is a critical level to keep short-term sentiment upbeat.GBPAUD breaks above double topThe Australian dollar softens as commodity prices pull back. The pair has been grinding up steadily from its support base at 1.7780.The latest breakout above 1.8060 has shifted the action to the upside after two previous failed attempts.1.8200, a major resistance level on the daily chart would be the next on the list. Its breach could reverse the pound’s misfortune and turn the thirteen-month-long downtrend around.In the meantime, a retracement on the back of an overbought RSI may meet buying interest around 1.8000.
Bulls Coming to Terms with Inflation

Bulls Coming to Terms with Inflation

Monica Kingsley Monica Kingsley 12.05.2021 15:43
Bulls had to fight hard to recover from intraday downside, and hadn‘t managed to close the menacing gap at the open. The VIX gap remained unchallenged too, but the volatility metric soundly retreated from its daily highs, and not even the option traders did add to their bearish bets. The tide seems to be in the early stages of turning as technology caught a solid bid and the behemoths didn‘t disappoint on a daily basis. Growth not lagging as badly is essential to the 500-strong index, but look for it to keep underperforming value.While a lot more needs to be done, the strongest sign of bullish resolve has come from the Russell 2000 and emerging markets. Both welcomed the continuing dollar woes, and faced off with the rising rates that would ultimately cut into their profitability – much further down the road. Let‘s put my yesterday‘s words into perspective:(…) Neither the smallcaps, nor the emerging markets, let alone S&P 500 fell on sharply rising volume, which speaks in favor of a bad day, chiefly driven by tech (yes, I‘m looking at you, $NYFANG) and weak credit markets. Look at market breadth – new highs new lows stunningly rose yesterday in spite of the 500-strong index losing quite a few dozen points.Classic risk off positioning, if only the defensives as a group did a lot better – but it could have been worse had commodities joined in the melee. They didn‘t, and they are thus the dog that didn‘t bark, detracting credibility from yesterday‘s stock market plunge (unless they catch up next, that is).The key points are improving corporate credit markets and commodities rejecting more downside (with the exception of lumber). Copper still keeps doing great, confirming my assessment that this would turn out as another buying opportunity. Gold, silver and miners stood the test, and remain consolidating at the high ground gained. Real rates turning more negative are their powerful ally, which explains why the rising nominal yields haven‘t exerted lasting selling pressure. Miners are by no means lagging behind, and silver isn‘t getting as overheated so as to put the precious metals upleg into danger, and neither are the USD/JPY move consequences (still positive on a daily basis). The sizable open gold profits will continue growing in all likelihood.Overall, we seem to be having a risk-off move in stocks not spilling over to commodities, precious metals or cryptos, all driven by the growing inflation threat – the market is getting attentive again. How long before it forces the Fed to talk, act and not play ostrich? The evidence isn‘t strong thus far, but there is a lot of time left till the Jun Fed meeting. Needless to say, bold moves would crater risk-on assets, which is why I‘m not expecting any real action yet with the 10-year yield at 1.64% only. CPI may force them as much as it wants today, but that won‘t do the trick as I just tweeted..Crude oil remains underpinned in the very short run by the Middle East tensions and the Colonial Pipeline shutdown, making for a positive technical outlook and rising open oil profits.Among cryptos, Ethereum keeps doing fine without any meaningful pullback or deceleration, but Bitcoin remains choppy around its flat 50-day moving average. The rising support line connecting its Apr and May lows better hold as the risk of extending losses should prices break below $56,300 roughly, is very real and would coincide with e.g. Ethereum taking a breather.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookNo daily volume indicative of a true reversal, and market breadth indicators turning deeply negative – such are the consequences of value stocks participating in yesterday‘s selloff. Repeating yesterday‘s notes, deceleration of the daily declines accompanied by a lower knot ideally would be the first sign that I would be looking for – alongside a positive turn in the credit markets. And we‘re near to getting both.Credit MarketsHigh yield corporate bonds made at least some attempt to close the bearish daily gap, and the volume doesn‘t say it was a desperate attempt. Contrast that with the quality debt instruments, and you see risk-on seeking to return.Technology and ValueTechnology bleeding stopped yesterday, yet didn‘t bring about a broader rally. We‘re still waiting for both growth and value to pull in the same direction – for that though, the market has to cope with the inflation fears first though.Gold, Silver and MinersGold and miners keep aligned in a strong position after yesterday‘s downswing was rejected, and it is precisely the 10-year yield lagging woefully behind the inflation expectations this week why the rising nominal yields aren‘t a credible threat.Silver daily outperformance isn‘t too worrying, not even should it be fully retraced next – the copper to 10-year Treasury yield ratio keeps moving in support of the precious metals upleg. We aren‘t crashing into a deflation – the markets are once again facing the high inflation reality.Crude OilCrude oil bullish consolidation is in its latter stages as the the rising volume heralds. Look for the uptrend to reassert itself next.SummaryS&P 500 recovered from heavy intraday selling pressure, and both tech and credit markets appear to be turning. Once the market comes to terms with the rising inflation and stops worrying about a Fed response this early, stocks would take on the recent highs once again. And that includes Nasdaq as the $NDX outlook has flipped bullish throughout yesterday‘s recovery (I hope the bulls were taking advantage – it‘s not too late to do so now).Gold, silver and miners keep chugging along, and the sound rejection of lower values bodes well for the short-term. The only question remains how much basebuilding do we have still ahead before the next upswing, amply supported by the negative real rates.Crude oil bulls look to have no more waiting in front, and amid the headlines arriving, I look for black gold to close solidly above $66 before the week is over.Bitcoin is still hesitating while Ethereum runs, presenting a potential vulnerability in its mostly neutral to bullish short-term outlook. I specifically don‘t like the upside rejection of today, thus striking a cautious tone.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 all the four publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals and Bitcoin Trading Signals.
Where's The Beef?  Is The US Fed Behind The Inflation Curve?

Where's The Beef? Is The US Fed Behind The Inflation Curve?

Chris Vermeulen Chris Vermeulen 12.05.2021 17:24
We recently completed some interesting research related to one of our newest Custom Indexes – the Commodities to Smart Cash Index (C2SC Heat Index) - weighted by the US Dollar and VIX.  We've been reviewing this new index for months watching it to see how it reacts to various trends in Lumber, Gold, Treasury Yields, the Smart Cash Index, and other weighted values.  Recently, we added the Fed Funds Rate to this chart and suddenly things took on a different perspective.We had drawn horizontal lines on the Commodities to Smart Cash index highlighting historical high, low, and confluence price levels.  Historically, when we see a chart that channels in a sideways range, one can often identify high and low price thresholds while also trying to find a confluence level (where a continued rise or decline in price is likely to continue). We can see how the US Fed reacted to rising inflationary concerns almost immediately as the C2SC Index rose near or above 6.5 (the RED Confluence level) throughout the past 25 years.  Each time, in 1994, 1999, and 2005, when a period of increasing inflationary trends, the Fed was quick to act to contain inflation.  The only time the Fed acted differently was in 2013~2015 and in 2020~now.Where's The Fed?  Watch Precious Metals For Signs Of PanicIn 2013~2015, the C2SC Index rose above the Confluence level (the RED line) multiple times, yet the Fed kept rates extremely low – ignoring inflationary risks at that time.  Then, in 2016, the Fed raised rates very slightly in an effort to test the global market's reaction to tightening financial policy ahead of a big US election event.  By mid-2017, the C2SC index started rising and the US Fed continued to raise interest rates.  By late 2017, the C2SC index had risen past the RED Confluence level again and the US Fed continued to raise rates well into early Summer 2018. In August 2018, the Fed attempted another 0.25% raise that broke the market trend and prompted a broad market decline into December 2018.  In reaction to this breakdown in US markets, the US Fed dropped the Fed Funds Rate from 2.5% to 1.5% in a panic move.  It stayed at that level until COVID-19 hit in February/March 2020.Looking at the C2SC index, commodities have rallied more than 300% above the past 25 years of historic highs recently while Yields and Gold/Silver continue to stay rather muted in trends.  Our concern is that the US Fed, in an effort to spark a solid post-COVID-19 economic recovery, has ignored the risks related to the extreme excess phase rally taking place throughout the globe in commodities, Cryptos, non-tangible speculative assets (NFTs, digital and others) as well as the risks associated with an eventual raising of interest rates to curb this inflationary excess phase.  Gold and Silver have just started what appears to be a new bullish price trend.  Will the US Fed be pushed to raise rates soon to curb this incredible bubble rally?We started bouncing around the idea that the US Fed was inadvertently prompting a South Seas Company type of bubble event by allowing gross amounts of capital into the markets and artificially keeping interest rates near zero.  For those of you who don't know the story of the South Seas  Company in London (1720), you can read more about it here: https://www.britannica.com/event/South-Sea-BubbleFOMO Hyper-inflation Continues (until it ends)In short, The South Seas Company was awarded £7 million to finance the war against France by the House of Lords.  This bill, known as the South Sea Bill, allowed the South Sea Company a monopoly on the trade to South America (mostly Slave trade) and was expected to be a boost to the companies bottom line as the war with France ended with the Treaty of Utrecht (1713).  Over the next 5+ years, the South Seas Company enjoyed robust profits and trade. Shares of the South Sea Company rose to 10x their value.  Then, the South Seas Company, with King George I of Great Britain as governor of the company in 1781, suggested taking over the national debt of Great Britain in 1720. Sign up for my free trading newsletter so you don’t miss the next opportunity!The South Seas Company accomplished this incredible feat and shares started to skyrocket higher from $128.5 to over $1000 in just 7 months.  As the hype continued to drive speculation and rumors, other stocks (some newly formed companies) were quick to catch the hype and quickly rallied to extreme highs as false statements, word-of-mouth hype and a general hyperbolic frenzy continued to drive speculation.What brought down the South Seas Company was unbridled rumors, outright lies, hyperbolic speculation, and, eventually, a flood of money from France's modernized economy.  When the trend finally broke down, it took about 12 months for the entire bubble to deflate – leaving speculative investors holding empty bags.The rally of the South Seas Company is very similar to what we are seeing right now in the US economy and in digital assets.  There were a number of facets in place to drive this type of hyperbolic rally.  First, the South Seas Company took over the national debt – essentially acting like the US Federal Reserve for Great Britian.  Secondly, the wild speculation related to ongoing business activities and future expectations prompted an over-enthusiastic buying frenzy – driving prices higher by 10x traditional valuation levels.In the end, with all the speculation, hype and people of title involved, the expected profits and returns from the South Seas Company never really materialized.  The stock price started to decline and finally broke downward very sharply near late 1720 – almost 3 months after it peaked.Is The US Fed Preparing To Make A Move Soon?The recent rally in the US stock markets has seemed to stall recently, as can be seen in this Smart Cash Index chart below.  Still, the recent rally since the November 2020 elections is nothing short of amazing – very similar to the rally in 2017 and into early 2018 – almost straight up.Our research team believes a continued market rally may keep attempting to “melt-up” as long as the US Fed does not step in to try to curb inflationary aspects of the markets.  It is hard to argue that traders and investors are going to suddenly change their minds in the midst of this FOMO rally - although, it does happen at some point.There are really two concerns related to how this may end: the US Fed suddenly acting to curb inflation by raising rates and/or the consumers suddenly realizing the valuation levels have exceeded realistic expectations.  We feel the rise in commodity prices as well as the current uptrend in precious metals and Copper may be pushing consumers closer and closer to that sudden realization that valuations are grossly advanced in comparison to real expectations.When you look at this Smart Cash Index Monthly chart, below, you see that the Fed Funds Rate is still anchored near ZERO while the Smart Cash Index is nearing the highest levels since the January 2018 Ultimate Peak.  The primary difference is that the US Federal Reserve is not acting to raise rates like they were in 2018 or even just before the Housing Bubble (2005~06).  This suggests the rally may continue in a hyper-inflation trend and may push well beyond anyone's expectations in the near future. Remember, our C2SC Heat Index is showing the current rally is nearly 300%+ above normal upper ranges.  How far will it go?  We really don't know how far this could continue to rally or where the ultimate peak is going to set up.  All we can suggest at this point in time is that we've entered uncharted waters and we don't have many historical reference points to use for our analysis. All we can do is ride this trend out using our advanced price modeling systems and watch for signs of a breakdown in support and correlative assets (like Precious Metals, Bonds, Utilities, and the Fed Funds Rate). If the Fed suddenly starts making moves to address pending inflation, then we may see some big volatility hit the markets.  We feel the Fed will slowly move to address inflationary concerns over the next 12+ months – not move in a sudden, aggressive manner. We need to watch how commodities continue to rally and how consumers react to these inflationary price concerns.  If global consumers suddenly shift away from spending as prices continue to rally, then we may start to see a dynamic shift in how the economy continues to expand/recover.  Consumers become very protecting of capital/resources when an economy shifts from expansion to contraction.Either way, there are going to be some really big trends in 2021 and 2022 for traders/investors.  This is the type of setup that can make fortunes for skilled traders/investors.  The bigger question is, will you be ready to jump into the strongest sectors when this downside trending ends?  Do you know which sectors present the best opportunities for future profits?  You can learn more about how I identify and trade the markets by watching my FREE step-by-step guide to finding and trading the best sectors. Don’t miss the opportunities in the broad market sectors over the next 6+ months.  Staying ahead of these sector trends is going to be key to developing continued success in these markets. My BAN Trader Pro newsletter service does all the work for you with daily pre-market reports, proprietary research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my premium subscribers. Sign up today!Have a great week!
Intraday Market Analysis – US Dollar Bounces Off Key Levels

Intraday Market Analysis – US Dollar Bounces Off Key Levels

John Benjamin John Benjamin 13.05.2021 08:12
USDJPY rebounds from Fibonacci levelThe US dollar jumped after April’s CPI rose 3% YoY nearly doubling markets’ expectations.The greenback has found solid support after a double-dip at the 61.8% (108.30) Fibonacci retracement level.The bullish momentum above 109.20 indicates buyers’ commitment to pushing beyond the recent consolidation range. A close above 109.70 could open the path towards 110.50.With the RSI in the overbought area, profit-taking may briefly drive the price south, 108.65 is the closest support in case of a pullback.GBPUSD reaches supply zoneSterling retreats as the greenback rallies across the board on upbeat inflation. The pair has met stiff selling pressure at the supply zone (1.4200) on the daily chart.A combination of profit-taking and surging interest for the US dollar could trigger a deep correction. An RSI divergence suggests a loss in the upward momentum, and when this happens in the proximity of a major resistance may foreshadow a reversal.1.4010 then 1.3890 are the next support levels if buyers start to dump their stakes.USOIL rises towards March’s highWTI crude climbed after the International Energy Agency said demand would outpace supply.The price action has kept its bullish bias after it bounced back from the demand zone around 64.00 which lies on the 20-day moving average. A close above the previous peak at 66.60 would prompt more buyers to join the rally.Last March’s high at 67.90 would be the next target and its clearance may send the price towards 70s. On the downside, the previous resistance at 64.90 has turned into a support.
Caution, the crypto sector is getting a bit overheated in the short-term

Caution, the crypto sector is getting a bit overheated in the short-term

Florian Grummes Florian Grummes 13.05.2021 12:41
It’s been a massive rally over the last 15 months in the crypto sector since bitcoin bottom at US$3,800 on March 13th, 2020. reaching price at around US$65,000 bitcoin saw a price explosion of more than 1,600%! Now however the sector seems ripe for some form of a healthy pullback and a breather. Bitcoin – Caution, the crypto sector is getting a bit overheated in the short-term!ReviewBitcoin year to date, Daily Chart as of May 10th, 2021. Source: TradingviewSince the beginning of the year, the price of Bitcoin has increased by almost 100%. Thus, the outperformance of Bitcoin compared to almost all other asset classes continued mercilessly. It seems as if bitcoin, or rather the crypto sector, wants to suck up everything like a black hole.Bitcoin´s waning momentum is a warning signalHowever, the Bitcoin markets have also been witnessing an increasingly waning momentum since late February. In particular, the pace of the rise had slowed down more and more since prices pushed above US$60,000 in March for the first time. Although another new all-time high was reached on April 14th at around US$65,000, the bulls are showing more and more signs of fatigue after the spectacular rally. Interestingly enough, this last new all-time high coincided exactly with the stock market debut of Coinbase.Only a few days later, a significant price slide down to just under US$50,000 happened, which was caused by a huge wave of liquidations. According to data provider Bybt, traders lost a total of more than US$10.1 billion that Sunday through liquidations forced by crypto exchanges. More than 90% of the funds liquidated that day came from bullish bets on Bitcoin or other digital currencies. In this regard, the world’s largest crypto exchange Binance was at the center of the earthquake with liquidation worth nearly US$5 billion. As the price of bitcoin fell, many of these bets were automatically liquidated, putting further pressure on the price and leading to a vicious cycle of further liquidations. Many (especially inexperienced) crypto traders were wiped out without warning.Year to date gains sorted by market-cap. Source Messari, May 10th 2021.After a quick recovery back to US$56,000, bitcoin continued its correction and fell back to US$47,000 by April 25. Since then, it has managed a remarkable recovery, as the bitcoin bulls are trying hard to restart the uptrend. So far, this recovery has at least reached a high of US$59,600. Nevertheless, the price development of bitcoin remains rather tough until recently, while numerous altcoins and so called “shitcoins” experienced incredible price explosions in recent weeks.The exciting question now is whether the current recovery remains just a countermove within a larger correction or whether the turnaround has already been seen and Bitcoin is therefore on the way to new all-time highs?Technical Analysis For Bitcoin in US-DollarBitcoin, Weekly Chart as of May 13th, 2021. Source: Tradingview.On the weekly chart, bitcoin has been stuck at the broad resistance zone between US$58,000 and US$65,000 for the past two and a half months. At the same time, the bulls continue trying to break out of the uptrend channel which is in place since 14 months. However, the recent pullback has so far only begun to clear the overbought situation, if at all. A somewhat larger pullback or simply the continuation of the consolidation would certainly do the market good. On the downside, the support zone between US$41,000 and US$45,000 remains the predestined support zone in case the bears should actually show some more penetration. If, on the other hand, price rise above approx. US$61,000, the chances for a direct continuation to new all-time highs increases quite a lot.Weekly Chart with a fresh sell signalOverall, the big picture remains bullish and higher bitcoin prices remain very likely in the medium to longer term. However, since reaching US$ 58,000 for the first time at the end of February, bitcoin has been increasingly weakening in recent weeks. Another healthy pullback towards the support zone of US$41,000 to US$45,000 USD could recharge the bull´s batteries. With fresh powers a breakout to new all-time highs in the summer is likely. Obviously, a good buying opportunity cannot be derived from the weekly chart at the moment. Rather, the stochastic sell signal calls for patience and caution.Bitcoin, Daily Chart as of May 13th, 2021. Source: TradingviewOn the daily chart, bitcoin slipped out of a bearish wedge on April 14th and has been attempting a countermovement since the low at just under US$47,000. However, this recovery is somewhat tenacious and currently hangs on the upper edge of the uptrend channel. Given the overbought stochastic and the relatively large distance to the exponential 200-day moving average (US$41,694), another pullback has an increased probability. The liquidation wave on April 18th clearly showed how quickly the whole thing can slide, given the exuberant speculation with derivatives and leverage.Of course, the bulls (and thus rising prices) have always a clear advantage in a bull market. Also, in view of the huge monetary expansions, speculation on the short side is not recommended. One is better advised with regular partial profit-taking (without selling one’s core long positions completely) as well as a solid liquidity reserve, with which one can take advantage of the opportunities that arise in the event of more significant pullbacks. The blind “buy & hold” or “hodl” strategy has also proven its strengths and can rightfully be maintained given the bullish medium to longer-term outlook.Daily Chart now on a sell signalSummarizing the daily chart, bitcoin is so far “only” in a countermovement within the pullback that began on April 14th. Only with a breakout above approx. US$61,000 the bulls would clearly be gaining the upper hand again. In this case, a rally towards approx. US$69,000 USD becomes very possible. On the downside, however, bitcoin prices below US$53,000 would signal that the bears have successfully fended off the breakout above the upper edge of the uptrend channel in the short term. The next step would then be a continuation of the correction and thus lower prices in the direction of the support zone around US$44,000 as well as the rising exponential 200-day moving average.Sentiment Bitcoin – Caution, the crypto sector is getting a bit overheated in the short-termBitcoin Optix as of May 9th, 2021. Source: SentimentraderThe rather short-term “Bitcoin Optix” currently reports a balanced sentime