The Streak Has Been Broken – Gold Teetering

After four straight afternoon fades in the stock market and one neutral day, the bulls FINALLY were able to overcome a gap down open and closed near the highs for the day on Friday. However, one day doesn’t change the pullback theme of the last six weeks.

Today, stocks are going to open higher with help from several deals announced along with Europe on firmer footing. AT&T buying Time Warner for $85 billion certainly is an eye opener, so much that no one is really talking about TD Ameritrade buying Scottrade and Rockwell buying B/E Aerospace. Mergers and acquisitions activity can definitely be a catalyst for the next leg higher in stocks, especially since no one has really been focused on this of late.

Back to the stock market’s behavior, I want to see multiple days of stocks closing in the upper 25% of their daily range along with at least solid internal to go along with the already good leadership in technology, transports and financials. Gold has been bouncing as I started discussing here.  However, all that’s really been happening is a clinging to the rising 200 day moving average as you can see below in pink. At the recent lows, both the 200 day moving average and an old trendline in blue seemed to contain the decline, but should gold rollover sooner than later, I don’t think we will see the same outcome.

gdx1

It’s already a busy week with M&A activity, but more than 150 S&P 500 companies will report earnings not to mention that the election is just two weeks from tomorrow. With the Dow still well above 18,000 and biotech pummeled, the market isn’t giving Donald Trump much of a chance.

If you would like to be notified by email when a new post is made here, please sign up HERE.

If you would like to be notified by email when a new post is made here, please sign up HERE

Gold & Silver Stocks Take a Pounding

Just a very quick post as I am in catch up mode from being out on Mon and Tues with the Jewish holiday as well as working on month and quarter end reconciliation and reporting for the next week.

The story of Tuesday was the collapse in gold and silver and the stocks. It was an ugly rout, but not unexpected given the somewhat bearish chart pattern below.

I wanted to point out that this 28% decline may be close to ending or at least pausing. The blue line on the chart is an old trend line that connected the April peak with the May peak and saw the June pullback end at that line. Extended out, the blue line is just below current levels for the GDX which is a basket of gold and silver mining stocks. Additionally, the pink line is the average price of the last 200 days which is a popular way to determine the long-term trend. Sometimes that acts as a ceiling or a floor.

The takeaway here is that we should be on the lookout for at a short-term look in the precious metals mining sector much sooner than later.

gdx

If you would like to be notified by email when a new post is made here, please sign up HERE

If you would like to be notified by email when a new post is made here, please sign up HERE

Rolling Out the Red Carpet for the Bears

It’s been a rough week for the bulls with Apple taking it on the chin and the Dow Industrials down every day in addition to the last two days of the previous week. Early indications have the bears heading into the weekend with another victory. I want to go back to what now seems like a very prescient post on July 20 titled Trouble Brewing Beneath the Surface. On that day, all of the major indices were at rally highs and the NASDAQ saw an all-time high. It was also a period where I continued to raise cash in portfolios.

I started out by saying, “the more I analyze, the more I don’t like.” I was very concerned about the lack of participation by the majority of stocks in the rally. I am still concerned, but at least it hasn’t gotten worse. Sector leadership, however, has started to wane as consumer discretionary, biotech and healthcare have all experienced sharp pullbacks. It’s not unusual to see the strongest stocks hold up until the very end and then fall in an elevator shaft style decline. Next week will be key for those sectors.

At the same time, the treasury bond market has put in a nice bottom and has been seeing a meaningful rally, which should continue. The dollar has been quiet for five months, but much higher prices should be in the offing. After collapsing to my sub $1100 Q3 target, gold is trying to hammer out a low. There should be a strong rally beginning there in the not too distant future.

This remains a time to keep some powder dry. A good buying opportunity may not be too far off in the stock market and likely by the end of September.

If you would like to be notified by email when a new post is made here, please sign up, HERE.

If you would like to be notified by email when a new post is made here, please sign up HERE

Bulls Hangin’ Tough

With the bearish seasonal headwinds this week, the bulls have done a nice job not giving up any ground so far. In fact, the bulls powered ahead on Tuesday and held firm on Wednesday. It certainly looks like the Dow and Nasdaq 100 want to join the S&P 500 at new highs this week. Although the S&P 400 and Russell 2000 have been laggards, they have certainly led the parade over the past week.

The real news so far this week has been in the bond and gold markets. As you know, I have been very positive on bonds since late last year, often calling myself “the only bond bull in America” or more recently, “no one”, as in “no one called this rally in bonds.”

Long dated treasuries continue to trade well and I expect some of the bears to throw in the towel now. And that’s why I am getting a little nervous being so bullish. It’s time to tighten up those stops and contemplate taking some chips off the table. With the Fed continuing the taper and the economy supposedly doing better, the bond market ain’t believin’. Something dark lies ahead.

Gold on the other hand is now falling sharply towards the sub $1200 target I have mentioned of late. Unless the shiny metal immediately reverses course, it’s going to be ugly until the metal hits bottom, probably next quarter.

If you would like to be notified by email when a new post is made here, please sign up, HERE.

If you would like to be notified by email when a new post is made here, please sign up HERE

Even the Bears are Bulls… for Now

The stock market is tired, again. That seems like a phrase I have used often this year without much follow through. There have been many times in 2013 when the market had risen sharply and then looked just plain weary. Instead of correcting or even pulling back smartly, the stock market behaved like it does when it’s in a powerful bull trend; it’s consolidated sideways within a few percent of its high and then blasted off again.

“Is this time different?” That’s one of the scariest phrases in our business!

The only difference I see now with other 2013 overbought markets is that sentiment is now and has been at rally killing levels, something I mentioned on CNBC and Fox Business over the past few weeks as well as here and in Street$marts. If this was not early December, I would have much stronger conviction to be negative, but it’s almost unheard of to see a meaningful peak or significant decline at this time of the year. That’s tough to ignore. While I absolutely hate when people say they are “cautiously optimistic”, I will say that I am a nervous bull who is dancing very close to the door.

So here we are, during the most positive time of the year. Something like 8 of the last 10 Decembers have been up. Stocks are at all time highs. There is no impetus to sell. There are few downside catalysts. Even the bears are bullish until January. Yet all is not right. Today (December 2) and tomorrow are historically very good days in the market. Stocks opened well and moved higher into lunch, but then the bears tried to make another stand. This time, they were successful, closing the market just off the lows of the day and ending with a semi nasty looking candlestick on the daily chart.

If we do not see an immediate about face on Tuesday, the evidence will point to a sometimes typical early December pullback of 2-5% that should bottom within five days of option expiration on the 20th. Don’t forget there is a two day Fed meeting on the 17th & 18th where taper talk will be all the rage. What a great excuse for a low if the market sold off into that meeting!

While small caps and technology have led the rally for the past few weeks, it looks like they are trying to cede leadership to large and mid caps. IF there is a pullback and IF the small caps and tech underperform for a week or two or so, that would set up such a nice trade into January for buying the Russell 2000, S&P 600 and NASDAQ 100 for the final 5-10 days of the year. There is also a tendency for the semiconductor group, which leads tech, to perform poorly over the next two weeks. It would all fit together nicely.

But that is putting cart so far in front of the horse. Let’s wait and see what happens over the coming few days. There is no need to push and rush here as stocks are extended and tired regardless.

On a separate note, gold was bludgeoned today and is now set up to see sub $1200 sooner than later. Sentiment has been worse than awful, but even that hasn’t been able to thwart the bears. At some point it is going to matter, but that will likely be from lower levels on the metals and perhaps all time bearish levels of sentiment.

I hope you had a meaningful and fantastic Thanksgiving!

Happy Hanukah to those who celebrate!!

If you would like to be notified by email when a new post is made here, please sign up HERE

Nightly Business Report TONIGHT

I am going to be on The Nightly Business Report tonight (Monday July 1st). In my neck of the woods, it’s at 6:30pm on public television, CPTV or channel 13. You can find it on your dial here, http://nbr.com/

In all likelihood we will be discussing what I see down the road as we begin the new quarter and second half of the year with earnings season beginning next week.

Stocks are beginning the quarter with the bulls in charge. Will it last?

Bonds saw enormous outflows from mutual funds last quarter as prices were hit hard. Is it time to buy?

Gold was decimated again. Is the decline over?

What will Bernanke and the Fed do?

If you would like to be notified by email when a new post is made here, please sign up HERE

Bears Tasting Blood Yet?

A new Street$marts has been posted!

http://www.investfortomorrow.com/newsletter/CurrentStreet$marts20130416.pdf

If you would like to be notified by email when a new post is made here, please sign up HERE