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Gold & Precious Metals

Coup d'État That May Shake the World


Posted by Arkadiusz Sieron, Ph.D.

on Friday, 13 April 2018 07:47

Everyone focuses now on the chemical attack in Syria. Meanwhile, the most important turnover in the world remains mostly unnoticed. But we’re on guard. Let’s read our analysis of the key revolution of 2018 and find out the implications for the gold market.

Hawks Take Over the Fed

Are we going to write about Syria? North Korea? China? No. You already know everything you should about these geopolitical threats. The media bomb you with news about bombings, trade wars, nuclear trials, etc. But the key upheaval is taking place in silence, in the cool marble rooms of the Federal Reserve Banks. ‘The Hawkish Revolution’ – this is how the future historians will call it.

What is going on? We will tell you – but first read the key paragraph of the minutes from the recent FOMC meeting the Fed published yesterday.

Some participants suggested that, at some point, it might become necessary to revise statement language to acknowledge that, in pursuit of the Committee's statutory mandate and consistent with the median of participants' policy rate projections in the SEP, monetary policy eventually would likely gradually move from an accommodative stance to being a neutral or restraining factor for economic activity.

What does it mean? The FOMC members have started to consider the end of its accommodative stance. This is a real revolution, as the U.S. central bank has been supporting growth since the outbreak of the financial crisis. Now, for the first time since the Great Recession ended a decade ago, the Fed is talking about adopting a neutral or even tight stance. The possible consequences are enormous. More interest rate hikes are up ahead. Gold investors, be prepared!

Before we discuss the conclusions for gold, let’s analyze the rest of the latest minutes. Generally speaking, even without the remarks about possibly dropping the accommodative bias, the minutes had a hawkish tone. Why? Well, the FOMC members agreed that the nation’s economic outlook had recently strengthened:

All participants agreed that the outlook for the economy beyond the current quarter had strengthened in recent months. In addition, all participants expected inflation on a 12-month basis to move up in coming months.

Have you noticed something interesting? Look carefully. “All” – isn’t this a rare show of unity? We are all hawks now. Indeed:

Most participants commented that the stronger economic outlook and the somewhat higher inflation readings in recent months had increased the likelihood of progress toward the Committee's 2 percent inflation objective.

And another hawkish strike:

A number of participants indicated that the stronger outlook for economic activity, along with their increased confidence that inflation would return to 2 percent over the medium term, implied that the appropriate path for the federal funds rate over the next few years would likely be slightly steeper than they had previously expected.

Brace yourself for further hikes.

Fed Comments Trade Wars

Interestingly, the FOMC members discussed the potential impact of Trump’s trade wars. Although they downplayed the importance of U.S. tariffs, the central bankers worried about retaliatory trade actions:

A number of participants reported concern among their business contacts about the possible ramifications of the recent imposition of tariffs on imported steel and aluminum. Participants did not see the steel and aluminum tariffs, by themselves, as likely to have a significant effect on the national economic outlook, but a strong majority of participants viewed the prospect of retaliatory trade actions by other countries, as well as other issues and uncertainties associated with trade policies, as downside risks for the U.S. economy.

The Fed officials were also uncertain about the impact of the American fiscal policy. Generally, they believed that it should boost growth, but some question marks remained.

Tax changes enacted late last year and the recent federal budget agreement, taken together, were expected to provide a significant boost to output over the next few years. However, participants generally regarded the magnitude and timing of the economic effects of the fiscal policy changes as uncertain, partly because there have been few historical examples of expansionary fiscal policy being implemented when the economy was operating at a high level of resource utilization. A number of participants also suggested that uncertainty about whether all elements of the tax cuts would be made permanent, or about the implications of higher budget deficits for fiscal sustainability and real interest rates, represented sources of downside risk to the economic outlook.

Implications for Gold

Is gold doomed after the hawkish revolution? Well, the price of gold has indeed declined after the minutes were released, as one can see in the chart below.

Chart 1: Gold prices from April 9 to April 11, 2018.

gold-price-chart



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Timing & trends

The Individual Investor Has Left The Building


Posted by Bespoke Investment Group

on Friday, 13 April 2018 07:23

sell-high-go-short

It took a long time before individual retail investors were even mildly bullish before the big drop, but now they are "flat out BEARISH". Since every major turn down into a bear market has been precededed by a long period of increasing optimism ultimately ending in euphoria, it was unusual as this analyst points out that just before the recent drop from the January 26th 2018 high, the "little guy's"were just beginning to become optimistic. Not eurphoric, but getting "comfortable" as explained below. Perhaps now they are virtually absent as they were when this chart below appeared in 2017: - R. Zurrer for Money Talks

retailpart-1

 

Individual Investors Bail

2018 hasn’t been the year for the little guy.  Late last year, individual investors appeared to be finally getting comfortable with stocks as bullish sentiment in the weekly poll from AAII topped 50% for the first time in nearly three years.  For a little while, they enjoyed the ride as equities surged to start the year and bullish sentiment reached just shy of 60%.  Then the correction came.  Since then, the bulls have been in steady retreat as increased volatility and lower prices remind these individuals why they were so apprehensive in the first place.  This week provided a further confirmation of that trend as bullish sentiment in the weekly AAII poll dropped from 31.9% down to 26.09%.  This marked the fourth straight week of declining bullish sentiment and took the percentage of bulls to the lowest level since last August.

 

041218-AAII-Bullish-Sentiment

 

 Charts courtesy of Bespoke - Save 30% By Starting a Bespoke Research Trial Now!

The investors leaving the bullish camp recently aren’t just moving to the neutral sidelines either.  They are flat out bearish.  In this week’s survey, bearish sentiment surged from 36.6% up to 42.75%.  Bearish sentiment has now increased by more than 20 percentage points in the last four weeks and is at its highest level since last March.



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Stocks & Equities

Now Is a Great Time to Buy the Dip


Posted by Chad Shoop - Banyan Hill

on Friday, 13 April 2018 06:08

During the recent wild volatility this analyst has used a method to stay out of trouble & keep on the right side of the huge swings. This tool now foresees a great opportunity as he explains below - R. Zurrer for Money Talks

On March 9, I cautioned you that we were about to enter a period of prolonged volatility

And that’s exactly what we saw.

The S&P 500 Index has plunged as much as 8% since that day, and the volatility in the market is nerve-racking.

A 1% move in the broad market now takes just hours, compared to what would have taken days to amass during all of last year.

But just as my chart of moving averages showed this was coming, it is also showing that the end of this slump in the market is near, and now is a great time to jump in.

Take a look:

cotd-13-final

In the chart, the red line is a simple 200-day moving average, an average almost all traders follow.

The green line is the 50-day moving average, and the yellow line is the 50-day moving average offset by 25 days.

The blue line is my forward indicator for the yellow line, because the data continues to change until it is 25 days old. At that point, it is our 50-day moving average offset by 25 days (the yellow line).

This yellow line is the key one, but the blue line is our indicator for where it is headed.

And just as it showed it was about to cross below the green line a month ago (which was bearish), it now shows that it is set to climb back above the green line — a bullish move.

This is why jumping in now is a great time to buy the dip.

I know, it may seem nerve-racking to enter with such volatility, but start small.

Buy some stocks to benefit from the quick rally, but keep some cash on the side due to the volatility that you can put to work once the market has turned the corner and is officially out of the stock market correction.

Regards,

Chad Shoop, CMT

Editor, Automatic Profits Alert



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Stocks & Equities

Stocks Enter Period of Seasonal Strength This Week


Posted by Jon Vialoux - Equity Clock

on Thursday, 12 April 2018 06:35

Timing is everything, and seasonality is a great tool to use to help get your timing right. A strong seasonal period began with Stocks in General on April 11th, and is currently powering the Energy Sector higher. This report covers the Markets, individual stocks and Energy. - R. Zurrer for Money Talks

SPGI

 

Seasonal Chart Analysis

Analysis of the S&P Global Inc. (NYSE:SPGI) seasonal charts above shows that a Buy Date of October 5 and a Sell Date of December 29 has resulted in a geometric average return of 2.39% above the benchmark rate of the S&P 500 Total Return Index over the past 20 years. This seasonal timeframe has shown positive results compared to the benchmark in 17 of those periods. This is a very good rate of success, but the return underperforms the relative buy-and-hold performance of the stock over the past 20 years by an average of 3.5% per year.

The seasonal timeframe is Inline with the period of seasonal strength for the Financial sector, which runs from November 22 to April 13. The seasonal chart for the broad sector is available via the following link: Financial Sector Seasonal Chart.

The Markets

Stocks jumped on Tuesday as investors reacted to a speech from Chinese President Xi Jinping, who discussed plans to to open up the country’s economy.  The S&P 500 Index surged by 1.67%, testing, once again, the declining 20-day moving average.  The benchmark has been gyrating between resistance at this short-term moving average and support at the 200-day moving average for the past three weeks, charting large intraday swings as investors attempt to find a level of comfort amongst equity prices.  The more formidable level of resistance to watch is the gap around 2700, which is now intersecting with the declining 50-day moving average.  Significant negative reaction to this hurdle would increase the likelihood of a break of horizontal support below around 2575.  A bullish MACD crossover was triggered during Tuesday’s session, presenting some hope that the next move on the benchmark is higher, barring some catalyst that destabilizes markets, yet again.

image

Topping the leaderboard on Tuesday was the energy sector as commodity prices moved higher following the Chinese President’s remarks.  The S&P 500 Energy Sector index broke out from its intermediate consolidation range, as well as advanced beyond significant moving averages in the process.  The energy benchmark has significantly outperformed the market for the past three weeks, benefitting from the strength in the price of oil, which remains around multi-year highs.  Strong demand for product commodities and a return to normal levels for stockpiles of the raw input have been a significant influence.  Seasonally, the price of oil and the stocks of the companies that produce it tend to gain through the start of May.  We’ll obtain further insight as to the state of the oil market when the EIA releases their official tally on Wednesday.



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Timing & trends

Todd Market Forecast: Impressive Breadth & Hot Techs


Posted by Stephen Todd - Todd Market Forecast

on Thursday, 12 April 2018 06:12

Fear of War, both Trade and Missiles drove all 3 Stock Indexes down yesterday. Despite the hammering, there were actually more NYSE issues up than down, an unusual event. Mr. Todd thinks something is going to happen missle wise, but doubts that "it will effect markets all that much" - R. Zurrer For Money Talks

Wednesday April 11, 2018. 3:00 Pacific

DOW - 219 on 4 net advances

NASDAQ COMP - 25 on 72 net declines

SHORT TERM TREND Bullish

INTERMEDIATE TERM Bullish

STOCKS: Today was all about the prospect of military conflict in the Middle East. Russia issued threats and President Trump issued counter threats. It does look something is about to happen, but I doubt that it will affect the markets all that much.

Today also looked like a bit of reaction and profit taking to yesterdays gonzo move.

We were impressed by breadth. It isn't often that we see a 200 point Dow drop with more advances than declines. 

GOLD: Gold gained $11. We still haven't closed above the late March peak which constitutes resistance.

CHART: The QQQ is the ETF for the NASDAQ 100 and it has a tendency to be market leader. I am impressed that after a March decline, it is now making a series of ascending highs and ascending lows. 

toddm

www.toddmarketforecast.com

BOTTOM LINE: (Trading)



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