Tag Archives: Macro

Gold’s longer-term breakdown/deflation scenario

Gold’s anticipated sell-off confirming the deflation risk suggested in its potential longer-term breakdown.

Gold – Weekly

Gold – Monthly

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Leading indicator SLV/GLD continues its rising risk message

 

$Silver : $Gold – Monthly Spot

$Silver : $Gold – Weekly Spot

$Silver : $Gold – Daily Spot

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Gold Prices Succumb to Dollar Strength – UUP vs. GLD

Debased dollar defies the odds again, drags widely owned gold

UUP – Daily

Gold – Daily

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Slumping Oil Beginning to Drag the S&P

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 signaling risk to 70% of U.S. GDP

XLY Daily

XLY Weekly

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Gold – Suggests serious economic issues

Divergent long-term gold pattern suggests serious economic issues

Gold Spot Price – Monthly

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Semis Lag = Capex Slowing = Trouble – $SMH

What would cause Corporate America to slow capex, with profit margins at a peak?

SMH :SPY : SPX – Daily

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Financials showing Weakness, forming possible Top – $XLF

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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Healthcare Stocks vs. Political Polls – A Correlation?

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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Silver’s Short-Term Bear Case – $SLV

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:

  • Known since prehistoric time. Man learned to separate silver from lead as early as 3000 B.C.
  • The melting point of silver is 961.93°C, boiling point is 2212°C
  • Silver’s element symbol Ag, is from the Latin word argentum meaning silver.
  • In many cultures, and some alchemical texts, silver is associated with the Moon while gold is associated with the Sun.
  • Silver has the highest electrical conductivity of all metals.
  • Silver has the highest thermal conductivity of all metals.
  • Silver halide crystals darken when exposed to light. This process was vital to photography.
  • Silver is one of the noble metals.
  • Silver is slightly harder (less malleable) than gold.
  • Silver ions and silver compounds are toxic to many types of bacteria, algae and fungi. Silver coins were stored in containers of water and wine to prevent spoiling.
  • Silver nitrate prevents infection in burns and other wounds.

Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)

Natural Gas – Why We are Bullish -$NG

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 Ever Divergent – Risky for GDP, Maybe Even the S&P

Cyclical metals indicators continue to rally less, and less long

Copper : Gold : SPX – Weekly

Silver : Gold : SPX – Weekly

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The Oil / S&P Correlation – Risk now being Realized

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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Commodities & QE, is the Bull Cycle Complete? – $CRB

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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How Fast Are U.S Economic Fundamentals Fading?

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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US Dollar Trading Bottom Developing – $UUP

Dollar trade developing, but translation into a primary trend move not yet likely

UUP Daily

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The Oil / S&P Correlation

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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QE & The Transports, What the Truckers Have to Say

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 Suggest Caution on Housing Stocks – $XLB

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

Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)

Bringing down the curtain on China’s secular bull market

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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