Stocks & Equities

Todd Market Forecast: Change To Bearish Short Term

Posted by Stephen Todd - Todd Market Forecast

on Friday, 18 August 2017 07:05

 For Thursday August 17, 2017 3:00pm Pacific.

DOW - 274 on 1850 net declines

NASDAQ COMP - 123 on 1650 net declines

SHORT TERM TREND Bearish (change)


STOCKS: Well, it had to happen sometime. We were stopped out of the SSO for a one point loss. This is the first loss of the year. Oh well, 10 and 1 should still get a bowl bid. More below in trading.

The market was hit by turmoil in Washington. There is concern that with there is now uncertainty about the agenda of tax cuts and infrastructure programs. The terrorist attack in Barcelona probably didn't help.

I believe that this is an overreaction. What are these Congressmen and Senators going to do? Go back to their districts and say, "Sorry we just couldn't get anything done please reelect us"?

Days like this in a bull market tend to have me looking for entry points on the long side. I am a bit wary because this is a weak seasonal period so we'll have to be extra careful in here.

I went bearish on the short term because a previous low was broken on the S&P 500 daily chart, but I doubt it will last long. This is still a bull market. Bear markets tend to only occur as a result of a recession and I don't see this at all.

GOLD: Gold was up $11 on the turmoil and a flight to safety.

CHART:  I'm not liking the fact that the S&P 500 broke a previous low (top arrows) and it's not particularly good that we became oversold so quickly again after the last oversold condition (bottom arrows). But I have also seen a break of a support followed by a six month rally. The key will be breadth. The advance decline line has to straighten out. Stay tuned.

Screen Shot 2017-08-18 at 7.02.52 AM 

BOTTOM LINE:  (Trading)


Asset protection

Silver Cycles and War Cycles

Posted by Gary Christenson - The Deviant Investor

on Friday, 18 August 2017 06:54

Why Silver Cycles and War Cycles?

Because silver prices and wars are connected, and because cycles have predictive value when viewed over the long term. Look at silver prices since the year 1900. Yes, silver has not freely traded for a long time, but there is value in the study.


Six important silver lows have been identified with green ovals. Two other lows in 1931 and 1971 are ignored. The six lows identified approximately match these wars:

Low Date War

1 1914 World War I

2 1939 World War II

3 1963 Vietnam War

4 1990 Gulf War

5 2001 War on Terror


Bonds & Interest Rates

The NEXT Credit Crisis Has Already Started

Posted by Bill Bonner - Diary of a Rogue Economist

on Friday, 18 August 2017 06:44

Screen Shot 2017-08-18 at 6.50.03 AMPOITOU, FRANCE – “My father told me to plant trees,” said a neighbor last night.

“It was right after I bought this place. Of course, I was young… I was busy… I didn’t have time to plant trees.

“Now, I tell my sons to plant trees while they’re still young. So they can enjoy them later.

“Funny, as you get older, and the less future you have available, the better you know it.”

Closed Book

What follows is a meditation on something we cannot know – tomorrow. 

The future is a closed book, insofar as it is possible to know what will happen. But that doesn’t mean the future won’t happen.

And although it is terra incognita – a place you’ve never been before – that doesn’t mean you shouldn’t pack your old familiar toothbrush and a warm sweater; it might be a lot like home.

Aesop wrote his fables. The French have added to them with a few of their own. Here’s one about the future:

Long ago, an old man decided to turn his farm over to his son and his wife.

“I have just one condition,” he told them. “You have to let me stay with you as long as I live.”

This was readily agreed. But the son’s wife and the old man didn’t get along. Finally, the wife persuaded her husband to throw him out. And so he did.

But taking pity on the old man, the younger man turned to his own son: “Go and get a horse blanket for your grandfather so he’ll at least have something warm to wrap around him.”

A few minutes later, the young boy came with a blanket, but his father could see that it was only half a blanket.

“Why did you cut the other half off?” he asked.

“Oh…” replied the boy. “That’s for you when you get old.” 

All of a sudden, a pattern came into view. And the future didn’t seem so unknowable.

Like a tall tree, the future casts its shadow backward over the present. 

If you think it will rain later in the day, you take an umbrella in the morning. If you think stocks will go up, you buy now. If you think you have only two years to live, there is no point buying a refrigerator with a 20-year guarantee.

Gift to the Future

The invention of money greatly increased man’s interest in tomorrow.


Timing & trends

Why The Bear Will Be Held At Bay

Posted by Cliff Droke via Seeking Alfa

on Friday, 18 August 2017 06:34


Despite similarities to 2015, energy sector weakness won't bring a bear market this time around.

While retail and energy are weak, other key areas are still strong.

Copper strength points to continuing long-term bull market.

Financial markets have been relieved that the past few days have passed without more inflammatory rhetoric from either President Trump or Kim Jong-un. The U.S. stock market recovered from sharp losses last Thursday, Aug. 10, when tensions were high between the two countries. The Dow Jones Industrial Average was up for the last four trading sessions (as of Aug. 16) in response to the easing of tensions, retracing most of its losses from last week.

Although there has been a decent bounce in most major indices after last week's dip, the internal health of the NYSE broad market remains a concern in the immediate term (1-3 weeks). In the past few months, whenever the S&P 500 (SPX) has sold off and fallen to the 60-day moving average, there has been a technical bounce followed by either a sharp rally or some more consolidation and then another rally. See the chart below.


...read more HERE

Gold & Precious Metals

July FOMC Minutes and Gold

Posted by Arkadiusz Sieron

on Friday, 18 August 2017 06:22

Yesterday, the minutes of the Federal Reserve’s July meeting were released. What do they say about the Fed’s stance and what do they mean for the gold market?

How can we summarize the recent FOMC minutes? Well, the FOMC members agreed that “the labor market had continued to strengthen and that economic activity had been rising moderately so far this year”. But the most important discussion concerned three other issues.

First, several participants noted uncertainty about the future course of the fiscal policy. A few of them even suggested that “the fiscal stimulus likely would be smaller than they previously expected.” The declining odds of significant fiscal stimulus imply less need for a more hawkish Fed. Thus, this is a bad development for gold.

Second, the several FOMC members pointed out further increases in equity prices. They argued that the rising valuations, together with continued low longer-term interest rates, are equivalent to an easing of financial conditions. Hence, the Fed could be potentially more hawkish as its tightening of monetary policy has been largely offset by other factors influencing financial markets. This is good news for the yellow metal.

Last but definitely not least, the U.S. central bankers discussed the recent low readings of inflation. Although many of them saw the softness in inflation as caused by idiosyncratic factors and thus temporary, the FOMC members noted the downside risks to the inflation outlook. The key paragraph is as follows:

“Participants discussed the softness in inflation in recent months. Many participants noted that much of the recent decline in inflation had probably reflected idiosyncratic factors. Nonetheless, PCE price inflation on a 12 month basis would likely continue to be held down over the second half of the year by the effects of those factors, and the monthly readings might be depressed by possible residual seasonality in measured PCE inflation. Still, most participants indicated that they expected inflation to pick up over the next couple of years from its current low level and to stabilize around the Committee's 2 percent objective over the medium term. Many participants, however, saw some likelihood that inflation might remain below 2 percent for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside.”

Hence, the recent minutes showed rising worries about inflation. Therefore, the U.S. dollar fell after their release (however, it rebounded today against the euro), while the shiny metal rose, as one can see in the charts below.

Chart 1: EUR/USD exchange rate over the last three days.


Chart 2: Gold prices over the last three days.

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