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Timing & trends

Bob Hoye: Checklist for a Top


Posted by Bob Hoye - Institutional Advisors

on Monday, 19 June 2017 06:43

The following is part of Pivotal Events that was published for our subscribers June 8, 2017.


Screen Shot 2017-06-19 at 7.09.33 AM



Perspective



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Gold & Precious Metals

Return Of The Gold Bear?


Posted by Jordan Roy-Byrne - The Daily Gold

on Saturday, 17 June 2017 10:39

Return-of-the-Bear opt02-1024x683

It was exactly one month ago we discussed our posture as a “bearish Gold bull.”

The gold mining sector hit a historic low nearly 18 months ago but this new cycle has struggled to gain traction as metals prices have stagnated while the stock market and the US Dollar have trended higher. Unfortunately recent technical and fundamental developments argue that precious metals could come under serious pressure in the weeks and months ahead. 

First let me start with Gold’s fundamentals, which turned bearish a few months ago and could remain so through the fall. As we have argued, Gold is inversely correlated to real interest rates. Gold rises when real rates fall and Gold falls when real rates rise.

Real interest rates bottomed in February and have trended higher ever since. As we know, the rate of inflation has peaked and is declining. Meanwhile, the fed funds rate has increased while bond yields have remained stable. The real fed funds rate and the real 5-year yield have increased by 1% in recent months. If inflation falls by another 0.5% and the fed funds rate is increased by another quarter point, then the real fed funds rate would be positive by the end of the year. That would mark a 2% increase inside of 10 months.

Turning to the technicals, we see that Gold is starting to follow Silver’s lead. Silver is very weak and headed for a test of $16/oz. Last week Gold formed a bearish reversal at major resistance ($1300/oz) and closed the week in the red and even below its April high. If Gold breaks its 2017 uptrend then it is likely to retest the $1125/oz level. There will be rebounds along the way but both metals are at serious risk of retesting their bear market lows.



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Timing & trends

Trading Desk Notes - June 17


Posted by Victor Adair & Drew Zimmermanew Zimmerman

on Saturday, 17 June 2017 10:33

Our thoughts on select markets as we wrap up the trading week.

Key events this week:

1) Bank of Canada signaled a change in interest rate policy

2) Federal Reserve was more “hawkish” than expected

3) WTI was hit with more bearish news

4) the CRB commodity index dropped to a 14 month low, down 9% from 2017 highs even as the USD fell 7%

Canadian Dollar: hit a 14 month low May 5 at 72.50 and then rallied in step with crude oil. But when crude oil “topped out” on the May 25th OPEC meeting and turned lower CAD drifted sideways for the next two weeks, taking its que from the weaker USD. On Monday and again on Tuesday this week top Bank of Canada officials indicated that the 2 “emergency” quarter point interest rates cuts made in 2016 had “done their job” and market expectations shifted dramatically to expecting interest rate hikes from the Bank of Canada sooner rather than later.

CAD had its best 4 day rally in over a year rising from 74 to 76 cents Friday through Wednesday...a 3 ½ month high. The trading volume of Canadian dollar futures hit an All Time High on Wednesday June 14 (Fed day.)

We went back to being short CAD at the end of this week because: 1) it had rallied 2 cents in 4 days 2) crude oil had taken another leg down 3) the Fed was a little more hawkish than expected 4) the Canadian stock market dropped to 7 month lows (down 5% from the February All Time Highs) while the major American stock indices were at All Time Highs. We remain short CAD.

CAD-Jun17

The US Dollar Index: dropped to a new 7 month low early Wednesday morning on weaker than expected inflation and retail sales reports and then rebounded sharply later that day and again Thursday on Yellen’s more hawkish than expected press conference remarks. We had been long the USD Index from the previous week and were stopped out on the early morning fall to new lows, but we “stepped up” and bought our positions back as the USD rallied on Yellen’s comments. (This was a “hard” trade to do, but as so many veteran traders will tell you, the “hard” trades often turn out to be your best trades!) We remain long USDX thinking that it may be turning higher after months of bearish pressure.



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Timing & trends

The Top 3 Articles of the Week


Posted by Money Talks Editor

on Saturday, 17 June 2017 08:09

jim-rogers-making-money-is-one-of-the-most-dangerous-things-you-can-do-as-an-investor

1. JIM ROGERS: The worst crash in our lifetime is coming

Rogers: I learned very early in my investing careers: I better not invest in what I want. I better invest in what’s happening in the world. Otherwise, I’ll be broke. Dead broke.  Well, what’s going to happen is it’s going to continue. Some stocks in America are turning into a bubble. The bubble’s gonna come. Then it’s gonna collapse and you should be very worried. 

....read it all HERE

2. Changes Coming Along With Higher Canadian Interest Rates

     by Michael Campbell

The Fed moved interest rates higher thursday putting pressure on Canada to raise rates. With BOC Stephen Poloz saying low rates "have done their job", and with Canadian growth outperforming the US recently it looks like higher rates are coming to Canada too. Will it be 1/4 of a percent, 1/2%....?..

....read it all HERE

3. Pop Goes The Housing Boom... In Canada

We're headed for another housing bust. This time in Canada. And the key is China.

It's no secret that Chinese investors, seeking asylum from the slow-motion credit bust underway there, have been dumping tons of cash into Canadian real estate.

But it looks like a number of events are coming together at the same time to blow up that market before the end of 2017.

....read it all HERE



Timing & trends

Random Thoughts on this Crazy Charging Stock Market Bull


Posted by Sol Palha - Tactical Investor

on Friday, 16 June 2017 09:41

In the sphere of thought, absurdity and perversity remain the masters of the world, and their dominion is suspended only for brief periods. Arthur Schopenhauer

The proverbial question for many years has always been; when will this stock market bull end? By every measure of logic and or common sense, this bull market should have crashed years ago. However, it hasn't, and much to the angst of many professionals continued its march upwards against all the odds. We would like to stop here and state that this market is now very close to trading in the extremely overbought ranges. A market can trade in the overbought ranges for an extended period. In this instance, we analysed monthly charts, where each bar represents a month’s worth of data. Historically, a market has experienced a correction within 5-10 months from the occurrence of this event. As of yet, the markets are not trading in the extremely overbought ranges on the monthly charts, but they are very close to moving into this zone.

Why has this market defied the expectations of all the professionals?

One of the culprits could be the emotional state of the masses. There is something almost insane taking place in this bull market; the higher it trends, the more anxious individuals come. It almost does not make sense as the opposite of this is what normally takes place. Were we not experiencing this first hand, we would find it almost impossible to believe such an event could occur.

Anxiety June  2017 - Copy

We update this gauge every two weeks, and the last reading shows that the masses are still firmly entrenched in the anxiety zone. Sadly history also indicates that bull markets never end on a note of fear or angst but on a note of extreme joy/euphoric. We don’t want anyone to lose that is not our desire; all we are doing is simply examining historical trends both from a price perspective and a mass psychology perspective. Thus it appears that this market will only crash when the majority finally decide to embrace this incredibly resilient bull market.



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