Gold’s anticipated sell-off confirming the deflation risk suggested in its potential longer-term breakdown.
Gold – Weekly
Gold – Monthly
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$Silver : $Gold – Monthly Spot
$Silver : $Gold – Weekly Spot
$Silver : $Gold – Daily Spot
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Debased dollar defies the odds again, drags widely owned gold
UUP – Daily
Gold – Daily
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We started posting red flags on oil back in September. We have an update today. Links to the series are below for your convenience.
OIL Preparing to Reverse – $WTIC September 04, 2012
The Oil / S&P Correlation September 19, 2012
The Oil / S&P Correlation – Risk now being Realized September 26, 2012
Update: slumping oil finally beginning to drag the S&P
WTIC – Weekly
WTIC – Daily
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XLY Daily
XLY Weekly
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Divergent long-term gold pattern suggests serious economic issues
Gold Spot Price – Monthly
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What would cause Corporate America to slow capex, with profit margins at a peak?
SMH :SPY : SPX – Daily
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S&P leadership in question, with cyclicals, technology and now possibly banks having run into resistance
XLF Daily
XLF Daily
XLF Weekly
XLF Monthly
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This week saw Healthcare stocks do a 180 degree turn in the way they feel and the way they are trading. The stocks which were on a tear are not trading like a normal corrective reaction; the bid in the group feels like it is gone.
The turn came the day after the first Presidential debate which was October 03, 2012.
The BBH, PPH and the XLV all peaked on October 4th & 5th. Since then, the bids have vanished.
The group as a whole made new 52 week highs after the Supreme Court’s ruling upholding Obamacare.
Even though the group is in a primary uptrend, and supported by fantastic demographics, we know that the market hates uncertainty and many of the group’s underlying technicals are negatively divergent.
We sold our Bristol-Myers (BMY) long and we are holding our Amgen (AMGN) short for now.
The charts below illustrate the correlation we see.
2012-General-Election-Romney-vs-Obama Polls tighten after 1st Presidential debate
XLV – Healthcare ETF Daily
PPH – Pharma ETF Daily
BBH – Biotech ETF Daily
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Where I am writing this note from there are still a few bears wandering around town tipping garbage cans as they fatten up for their winter hibernation.
The bears will be gone soon and so will we be with this call.
Lease rates have been a reliable short-term indicator for trading tops in Silver.
SLV Weekly
Silver Lease Rates
We have a small trading SHORT position on in SLW (which could easily bite us) at the time of this post and we rate SLV Red in the Bikini State
Silver Trivia:
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We are long-term bulls on Natural Gas ($NG) and see both the macro and technical Bull case for $NG improving.
The former (macro) case includes declining rig counts, increasing exports, environmental concerns, increased $NG power generation, rising diesel prices, seasonality (likely discounted) and more.
We prefer to focus on the latter (technical) case and let the market do the speaking.
The technical case includes bearish sentiment combined with a break of a 3 year downtrend.
We find “the latter” technical case is much easier to articulate.
Natural Gas – $NG Weekly Trading Channels
The chart above shows $NG at an inflection point that may provide short-term resistance. A break-out of the inflection point above will confirm the break-out of the 3 year downtrend seen in the chart below.
$NG Weekly with Positive Trending Oscillators
Some of the technicals for the macro case below
August 2012 Monthly Dry Shale Gas Production
Weekly Natural Gas Rig Count
High Seasonal Storage levels will pressure rig count, which is bullish for $NG prices
We rate $NG Green in the Bikini State.
Stocks we own or are watching for trading opportunities are CHK, DVN, CVX, SWN, RRC, and XOM
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Cyclical metals indicators continue to rally less, and less long
Copper : Gold : SPX – Weekly
Silver : Gold : SPX – Weekly
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Updating the S&P call from the oil market last week – risk now being realized
Click link for last week’s commentary - The Oil / S&P Correlation
WTIC vs SPX Correlation
WTIC vs SPX Divergence
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Message from the CRB: If QE4 hadn’t been fully priced in prior to its announcement, it was with the spike on announcement day…
CRB Daily
CRB Weekly
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As I look at all the long set-ups today , especially in the basic material, energy and health care names we are trading, I was reminded that we stand on a gallows, with our head in the noose.
We have to keep trading the current trend which is up, but we are hedged, taking quicker profits, and keeping our deployed capital low.
We don’t know the how or when, and expect the powers that be try to keep the tape elevated through the election, but the charts below suggest there is risk of a seismic downtick lurking in the equity markets.
“Stunning divergence in TRAN relative strength (daily and weekly) now greater than before the top in 2007″ – Beachcomber
TRAN : SPX – RSI Daily
TRAN : SPX – RSI Weekly
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Dollar trade developing, but translation into a primary trend move not yet likely
UUP Daily
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The Oil / S&P correlation currently conflicting with bullish sentiment; worth a watch.
WTIC vs. SPX Daily
WTIC vs. SPX Weekly
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It’s one thing to already turn thumbs down on QE prospects, quite another to have trucking stocks now diverging worse from the S&P than they did just before the 2007 bear market.
Dow Jones US Truck Index Weekly
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Lumber futures are down 14% in past month, to a 3-month low. Ten month up-trend is now broken.
As a positive divergence last fall suggested the rally in housing no one expected, the current break of trend line support should at least suggest caution about how much rally remains.
Lumber Globex Daily Continuation
This diverging weekly pattern in lumber futures confirms the risk signaled in the daily’s trend line breach.
Lumber Globex Weekly Continuation
To download a copy of this commentary click the .PDF link below
Lumber Prices-Special Report.PDF
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Beachcomber sent us an updated view of the Shanghai Stock Exchange (SSEC) and its long-term trend on the monthly chart posted below.
The length or duration of a trendline, and the angle of ascent or descent of the line, are important factors in determining the significance of the trend being examined. The SSEC chart shows a gradual rising 17 year rising bottom line; that is a significant trend!
A break of this trendline will have powerful bearish implications. Trendline breaks are measured for minimum price objectives like other price patterns e.g. “peak to trendline projected down from the break.”
A trendline break of this size for the SSEC has the potential to put the index back to levels last seen when Beijing got its first McDonald’s.
Fries with that break anybody…?
SSEC Long-Term Monthly Pattern
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