The Market Perspective

Fourth Wave in Gold ?

Monday April 22 2012

We continue to think there is valid reason for concern. See the report on CAt ON PAGE c1 IN TODAY'S WSJ

Caterpillar Continues to Crawl Along

Earnings expectations fell from $2.370 to $1.84 adn then to $1.36, the real number is $1.31. Growth estimates have gone from positive to negative. Remember Apple earnings are tomorrow.

Gold has managed a rebound from 1325 to 1421.20 since last week. But other related stocks re stil in the dumps like KOL, COPX. The miners have barely recovered. The recovery in silver has been particularly tepid. All of which is to say that this looks like a fourth wave. If the bottom were in one would expect a robust across the board price recovery with headlines like Bargain Hunters Line Up After Gold Smash. CLF and SLX remain in the dumps.

Central Fund continues offered over a 1% discount, another indication of a fourth wave underway rather than a recoery.

The one hour chart on GLD has the MACD topping, on the two hour it is still climbing, the daily could still collapse. Granted sentiment is terrible so these markets may put in a low here. Otherwise we would be on guard for a final move to below 1300. That would pretty well seal the monthly charts as having turned down. THe dollar wqas unchanged but remains in an uptrend.

Stay tuned.

Correction of ETF Transaction

Monday  April 22, 2013

We erred in a statement regarding ETFs. A reader sends this information.

The only things that have any bearing on the actual expansion or contraction of an ETF's underlying portfolio is the creation and redemption feature and the slight adjustments to keep in line with the index.  There is no such thing as a withdrawal from an ETF.

The creation and redemption is only accomplished by the authorized participants (usually the big brokerages). These are done in large chunks, typically 50,000 to 100,000 shares of the ETF. The AP can exchange the underlying portfolio for newly created shares in the ETF, or vice versa to get their money out of an ETF. So, they buy or sell the underlying portfolio stocks separately.

Oil at $88

Weekend April 21 2013

Weekly Newspaper Column This column appeared in the Odessa American and the Andrews County News this weekend.

Reasons for Concern

Last week we compared the construction craze of  the 1980s boom era with what is happening today. The two eras look remarkably similar. As markets  complete five years from the financial panic of 2008 there are reasons to believe a position similar to late 2007 and early 2008 now exists. Let’s take a look.

Every bull market has its tech darling like IBM in the 1960s. in the last ten years it has been Apple. Apple has sold over 50 million iPads, a feat that certainly eluded Dell and HP. Last September at $700, ‘analysts’ were arguing not whether but when Apple would hit $1,000.  It closed Thursday at $392.05. Apple earnings are due next week . Once the social mood turns negative, whatever happens then seems to provide more negative fodder.  I expect Apple will fall below $350.

Rackspace is another tech standout, or it was. It fell from $80 in February  to $44.85 yesterday. Such reversals of fortune should serve as a warning sign to investors that the most popular stocks may be in fact the most dangerous.  Once the mood shifts to negative, mutual funds drop a stock all at once.

Apple is a major component of the NASD 100.  That index has begun falling from its recent high. Stock indexes typically peak around tax time and we have had quite a rally since last November. But this is also occurring as various internal indicators are peaking.  Measures like the NASD and NYSE summation index are falling. Again this is typical of the time of year.

And then there is the price action of commodities. Gold and silver have just experienced massive free falls. That has turned the monthly charts on both to the bear camp. While gold bugs have numerous explanations, lower prices surely lie ahead there as well.

Copper managed a big move just yesterday. That ended the slide from $3.80 to $3.05.  Perhaps the most nervous trade is the one important to Basin residents-crude oil.

Crude oil has experienced a $2 + range for each of the last five days.  This morning June futures  are trading at $88.31. . A close under $90.62 this week would be especially worrisome as that would turn the daily trend down. Unleaded gasoline has fallen from $3.35 to $2.70. It too needs to make a stand here.

Energy services represented by the XES ETF bounced yesterday on big volume, and that is just what it needed to do. Halliburton and Schlumberger have been in downtrends and also bounced yesterday.

As per usual the item overhanging all this is the US Dollar. While Ben Bernanke is madly printing Dollars ,they remain in demand world wide. It is the stronger dollar that helped topple gold prices. As crude oil is priced in US Dollars we need to watch the 82 level on the Dollar Index. An advance in the Dollar will likely pressure commodity prices lower.

Interestingly the Dollar Index is pulling back to the same sort of support we seen in crude oil. But I seriously doubt the markets can sustain a simultaneous rally in both crude and the buck. We will have a winner and loser but there can only be one winner.

Meanwhile nothing has changed in Europe. While there has been talk of austerity, all the talk resembles the  famous analogy about re-arranging the deck chairs on the Titanic hoping to avoid the iceberg.  Cheap money has continued to fuel rampant real estate speculation. The Wall Street Journal has renamed its Distinctive Properties section as simply, Mansions. That alone should give one pause as the glitterati swap multi-million mansions.

Did the bank balance sheets ever really change?  What happened to all those bad home loans?  And we have previously noted the trillion dollar student loan debt. Delinquencies rise and there is no collateral.

Stocks have doubled since 2009 and that has led to massive optimism.  The sharp drops in gold, Apple, and Rackspace are warning signals that markets are exhibiting the kind of high volatility that accompanies a market top.

Investors and residents of the Oil Patch should be on high alert.

Follow Professor Elam at http://www.themarketperspective.com

 

 

 

Flash Crash Potential Increases

Weekend April 20 2013

Americans Grow More Pessimistic on the Economy Again this is in line with my comment that the Great Recession of 2013-2015 has begun, social mood turns down. 

Now let's connect the dots...

IBM

 IBM did not meet expectation dropping 8.29% Friday.

 Rackspace

Rackspace nears a 50% decline in less than three months. 

Apple

Apple is duplicating the rapid fall in RAX.

Ramki sees Apple at $318 I suggested Apple would be cut in half going to 350 from 700, if this can happen to what was the most popular stock in America last September, don't tell me the SPX can't go back to 666.

 

Gold Silver

And we have the big crash in gold and silver. 

How long before the increasing incidences of crashes cause the entire herd to panic? 

Short Term Count on Gold

The 200 month moving average is at 1435. If the market closes below 1435 for the month that will confirm the monthly trend has turned down. That suggest the labelling above may be correct. No doubt all think the worst is behind us, which is typical Fourth wave thinking  But the market could still put in a fifth wave to end large Wave three which would be below 1300. 

HOURLY GLD

Hourly MACD is already high on GLD, again this may support the idea that we have one more leg down before we are done here. 

NASD 100

For example what is holding the NASD 100 up? summation index in red black has fallen through the NASD 100 price line. But the index itself has yet to fall. I doubt this can go on much longer. 

Crude Oil

Crude oil topped in early 2011 before gold in the lower panel. The 2.7% drop this week brought it under the weekly MA at 90.95, lower for the June daily contract but same result. 

Daily Crude Oil

Like gold crude seems to exhibit a four wave near complete pattern which suggests another leg down. Also note that the 125 day MA crossed the 200 to the down side. And the XES Energy Service at bottom has dropped below its 50 day MA. 

The Dollar

Another reason to expect a drop ahead in gold and oil is the strength of the US Dollar After consolidating for two months, its MACD at bottom is turning up.  The Canadian Loonie ETF which  is FXC is falling at top against the Dollar. 

The Bottom Line

The US Dollar is strengthening which may well lead to lower oil and gold prices in the near term. Granted gold is terribly oversold but dollar strength never helps commodities priced in dollars. 

My outlook on gold is as follows. Gold completed a bull market in early 2011. Gold is now finishing a third wave of five. I suspect gold is finishing a wave four up within a third wave. That should be followed by a move to below 1300 which means gold makes a new low for the month. the fact that related stocks to the metals are still falling with a bump in gold also suggests small wave four action rather than a recovery. 

A fourth wave snap back rally should last into June. 

Then a long drop into the fall to finish Big Wave Five. 

I am still evaluating oil but I suspect it too has topped and will be falling. 

The US Dollar has recently consolidated and is about to move up again, bolstering the near term outlook for weaker gold and oi. 

Stocks remain at elevated levels. We wonder how long the overall stock market can endure repeated air pocket drops on big names like Apple and IBM without experiencing more pullback. 

Thinking About ETFs

One of Bob Prechter's observations was that the bear market might well cause some financial instruments to be eliminated. Margins have been raised on gold futures. We have already had collapses in futures baked ETFs like the TVIX. What about others like GDXJ?  To meet withdrawals, the shares of individual companies have to be sold. With the price of GDXJ already falling then the holdings fall as well creating a vicious downdraft. Now let the price of gold fall to where the miners do not make any money. Then we will no doubt have some bankruptcies. Owning 80+ gold miners may keep one safe from a mine collapse in any one company but not from a general collapse of gold prices. The same thing is true for SIL in silver or USO in oil. 

I am suggesting that at some point an ETF might simply fall apart given the weakness of its components. This is yet another worry and so such instruments might best be avoided. 

 How does Your Town Look?

I noticed this older strip center driving to school last week. I stopped yesterday to take a photo for readers and noticed all shops were empty but one. Other new strip centers in the area have never been occupied. Are readers noticing this in their towns?

The window signs are all For Lease. Granted this is anecdotal but it speaks to the difficulty of small business in this era of inter net shopping and show rooming. 

 

hanks for reading The Market Perspective

[email protected]

 

 

 

The Market Perspective bases its information on techniques and sources that have been found to be reliable in the past, and The Market Perspective tries to base opinions on sound judgment and research, however, we do not guarantee that future results will match past performance ands no guarantee can be made that advice will be profitable. The Market Perspective accepts no money for stock recommendations and is purely motivated by its own research in recommending any stocks.  Put another way, the responsibility for decisions made from information contained in this letter lies solely with the individuals making those decisions. The editor and persons affiliated with The Market Perspective may at times have positions in securities mentioned.  Nothing contained herein represents an offer to buy or sell securities. The Market Perspective encourages investors to be diversified, and to maintain sell stops and risk control over their valuable investment capital.  No guarantee can be made to the accuracy of text or charts.

 

 

 

Gold Where We Are Now

Thursday April 18 2013

Gold

Prior to the break of 1525, the gold bug community was citing that as support. Now that 1525 was crushed there is another round of explanations why it happened. I see the 288 day MA line being cited as support. I am sticking with Ramki's explanation. See previous post April 16.  We are at 1390 today. He expected a fourth wave in a larger third wave to move to 1420-1430. that is pretty close. Then a final fifth wave down hits. That would take gold to a new low say 1275 to 1300. I am guessing the end of the month, April 30. Then we could expect a fourth wave up into June. No doubt that will encourage bulls but the final Large Fifth Wave low, like the March 2009 low for stocks, would still lie ahead this Fall. By that time the bulls will be out of excuses. That is my template for the time being At present I do not own any gold positions. 

this suggests a fifth wave or completion of the Large Wave 3 at 1300 or below by month end. 

Why is this the correct interpretation?  Look at the breakdown on the long term monthly chart.

Monthly Gold

For the first time since the breakout in 2003 Gold closed below its 50 month Moving Average. This surely targets a re test of the top of the 2008-2009 debacle. Testing the top at 1000 would leave it in an uptrend but would leave most out of the game for the final run up to some sort of top later in the decade. 

Wells Wilder made the point that one needs to trade in the direction of the trend, if you are wrong the trend then bails you out. So we wait for another recovery. 

Thanks for reading The Market Perspective.

 

Past is Prologue, Revisiting the Social Mood of 1968-1974 All Over Again, Monthly Gold

Thursday April 18 2013

We have done all we can to prepare you for the downturn in negative mood. Consider the events of the last two weeks. 

Gold, oil, Apple all down

Boston Marathon Bombing

Waco Fertilizer Plant Explosion

Before that murder attempt of Gabby Giffords

All these events have their parallels as we entered the last 18 year period of economic stagnation. 

Older readers will recall some of these names from  1968-1974

Weather Underground

Symbionese Liberation Army

Red Brigrade

and of course there were  murders of Bobby Kennedy and Martin Luther King

Now here we are all over again with terror and murder. 

The mood on the political front is summed up in this photo at right. The expression is due to his own party failing to pass the gun control legislation rather than the Boston Bombing.  Past periods of stagnation also suffered from a lack of leadership with LBJ choosing not to run for re election, Richard Nixon resigning, Ford defeated, and then Carter defeated. This is also typical of the first two years of a second term President. Knowing he will not run again, party members are more loyal to their own re election prospects. 

By the way this outcome of the gun control legislation  is exactly what Kim Strassel predicted on the last Weekend WSJ television show. I highly recommend you put it on your watch list. 

 

NASD 100

Apple is clearly a big part of the NASD 100 or OEX.Both topped last September. The OEX has managed to recover but I suspect that without a rally in Apple it is putting in a double top. One by one various indexes are starting to fail. 

The NASD Begins its Descent

As always our reliable NASD Summation Index proved an Early Warning. Now the NASD Index,  shown in green,  is falling. As Richard Russell says, the Bear is Clever. The Bear will no doubt hold up the market to convince investors to stay when they should be exiting. 

NYSE Advance Decline Volume

The Advance Decline volume chart has completed a clear five waves up and is now pulling back. 

Here is another confirmation of  that old saying, After May Go Away.

Crude Oil

Crude may be attempting to make a bottom here but the sell off has been brutal. We cannot know if this is an ABC corection of we are in the middle of a third wave of a five wave pattern. 

And so post tax time is going according to the usual seasonal weakness. 

Gold

Prior to the break of 1525, the gold bug community was citing that as support. Now that 1525 was crushed there is another round of explanations why it happened. I see the 288 day MA line being cited as support. I am sticking with Ramki's explanation. See previous post April 16.  We are at 1390 today. He expected a fourth wave in a larger third wave to move to 1420-1430. that is pretty close. Then a final fifth wave down hits. That would take gold to a new low say 1275 to 1300. I am guessing the end of the month, April 30. Then we could expect a fourth wave up into June. No doubt that will encourage bulls but the final Large Fifth Wave low, like the March 2009 low for stocks, would still lie ahead this Fall. By that time the bulls will be out of excuses. That is my template for the time being At present I do not own any gold positions. 

this suggests a fifth wave or completion of the Large Wave 3 at 1300 or below by month end. 

Why is this the correct interpretation?  Look at the breakdown on the long term monthly chart.

Monthly Gold

For the first time since the breakout in 2003 Gold closed below its 50 month Moving Average. This surely targets a re test of the top of the 2008-2009 debacle. Testing the top at 1000 would leave it in an uptrend but would leave most out of the game for the final run up to some sort of top later in the decade. 

It is important to trade in the direction of the trend. That trend is now down for gold. A thirty dollar move up in gold should not take long. 

Thanks for reading The Market Perspective.

A Revised Outlook on All Commodities

Wednesday April 16, 2013

Europe Heads for a Depression This is another article confirming my prediction that the world is entering  the Recession of 2013-2015.

Will Apple drop by 50%  Here is another clue of things to come this fall, just how fast a tech darling can fall from grace. 

After reading numerous blogs and ideas, I have settled on Ramki's analysis being the preferred count. Given the extreme move Friday and Monday, it had to be a third of a third wave which is his conclusion. And the trend is down. Again,  I respect intellectual property so am referring readers to his analysis. This suggests remaining positions in anything remotely resembling a commodity play should be exited as gold hits 1420. In fact the rebound here is extremely weak with gold up $8 this morning and oil down, again. The drop in oil as we have mentioned many times was the prelude to the world wide deflationary crash of Fall 2008. Here we go again. The good news is that with this perspective in mind we can to to cash, and hopefully profit from the expected drop in prices. 

This means there are much much lower prices ahead for gold and silver. I suspect the same thing is true for crude oil.  This would be a good time to read or re read my post from last Friday April 12, This time It's Different. I point out that the frenzy of building accomanying the oil boom is happening again, and will end badly as it did then. Our post yesterday of HAL SLB CAT WTIC makes that point pretty well. 

As I remarked last Sept 18, it is easy to exit positions in a period of calm, stocks are still there,whatever upside may be left it is simply not worth the risk, we suggest going to cash. I just noticed stocks down over 150 points.

 

Gold and silver plunge is well underway, oil is just beginning its downward spiral. Do not delay in taking defensive action. 

We have written about preparing for The Recession for the last few years, it is upon us now. More later. 

We will have some strategic ideas on how to profit from this. We will also be discussing different ways to protect or hedge such positions. Thanks for reading The Market Perspective. 

Frantic

Tuesday April 16 2013

Frantic

That is the only description for the jump in jump out nature of trading the last few days. Amid the gold and silver crash, that bled to stocks yesterday, something else caught my eye. Yes we are getting rebounds in stocks and gold and silver this morning, 

Just as we have had rebounds in gold and silver since our exit last Sept 18 2012, think about that.

At any rate, I mentioned driving through the Eagle Ford Shale Area between San Antonio and Laredo last week. The amount of activity is simply phenomenal, ie, it looks a  lot like the Stock market at SPX 1575. It is the literal translation of positive social mood towards the latest  version of the gold find at Sutters Mill in 1848 or so. A previously beaten down area, forsaken as an economic wilderness has been transformed al the Beverly Hillbillies.  And os we have frantic activity based on the perceptions of the past two years. 

Here is what caught my eye yesterday. 

Schlumberger SLB

Halliburton HAL

HAL and SLB are the two giants of energy service world wide. 

WTIC Crude Oil

HAL and SLB have been following Crude Oil down since the February top. Recall from our posts that most of our internal indicators like the Summation Index for Stocks also topped in February, and they have been trending down since. 

NYSE Summation Index

The Summation Index sums net advances and declines in stocks on an unweighted basis. It too topped in February. Now scan your eye down all four charts. The conclusion I reach is that they all exhibit the same pattern. Energy Service, Energy, and stock market internals are all signalling weakness. 

You of course will not hear this on CNBC. I have the sound turned down but there is reliable Jim Cramer touting stocks again. 

Different markets top at different times. This is how the majority is fooled and the down turn catches them off guard. 

My experience is that no market is more sensitive to emotion than crude oil. I posted my newspaper column from a week ago asking What Could Go Wrong?  Last week I delivered a short talk on the San Antonio economy. One observer afterwards was quoting construction statistics for San Antonio. This is not  a primary indicator, it is a secondary indicator that issues from primary indicators like the oil price.  Two years of expanding Eagle Shale production result in plans for Weatherford, Baker Hughes, and now Halliburton to build its third larges facility in the world here in San Antonio. In the mean time however, the price of oil is falling. After all there is no shortage of supply. And that in a  nutshell is what could go wrong. Here is another puzzle piece in the same time frame, a bedrock of America company if ever there was one. 

CAT

Again, it's the same graph, only much worse than HAL and SLB, this one has fallen under all the MAs. 

The Dollar, Gaining Strength

We conclude this morning with one chart that is going the opposite way of Eenrgy Service, Crude Oil and CAT, the US Dollar. This morning it touched its 50 day MA but the trend is still up. Sure the US is printing too many dollars, but Venezuela and Europe are in even worse shape.  Gold and oil priced in dollars are down as the dollar is up. 

The Great Recession of 2013-2015 has begun, someone tell Jim Cramer....

 

The Recession Gets Underway

Monday April 15 2013

In our update a week ago we declared that the Recession had begun. It got further under way today. While gold and silver crashed even more significant was the 5% drop in HAL and SLB. Oil dropped $3. It has been the expectation of prices on a new higher permanent level that has driven the energy boom in various parts of the country. The market told us today that may not  be the case.

We have written about this for months if not years. We fully expect a repeat of a 1973-74 market meltdown decline. A drop in commodity prices indicates less demand. Less demand means less economic activity, And so it goes.

It would take the scriptwriter for the old Maverick tv series to discern when one might get a burst of contra buying power from here on out. The better idea is cash and using any rally to scale in HDGE positions.

We are officially of the position that gold and silver have entered bear markets. We expect far lower prices for the miners  with the decline extending into Fall 2013. OIl would enter bear territory on a weekly close under $78. Raise cash, get defensive, the exact top of these markets may elude us but the time to be defensive has arrived.

Are Stocks Headed higher Still: A Crash in Gold and Silver

Weekend April 13-+14, 2015

Monday is income tax payment deadline, the government is only marginally interested in your filing the return but insists that you pay now. It is no accident that income tax payment time is as far from the traditional election day, Nov 2, as possible on the calendar. America existed perfectly well until 1913 with no income tax. It was sold as a a tax on the rich,  a mere 1%, does this sound familiar?

Ed Carlson at Seattle Technical Advisors has an excellent analysis of the gold cycles for the bull run since it began circa 2000. Ed has published two books on the analytic methods of George Lindsay. Learn more on Ed's Amazon Page.  I published an academic review of An Aid to Timing in Journal of Contemporary Issues in Business research. 

I have arranged for readers of TMP to be able to receive Ed's special analysis on gold cycles and what to expect next. Drop an e mail request to me 

[email protected]

And I will pass them on to Ed ASAP 

I respect Intellectual Property Rights and will not divulge his findings. 

Here is a completely opposite view of gold, CAlafia Beach Pundit takes a negative view.

Jesse shows the Hedge Funds with a massive short metals position.

How the Gold Market Crashed  raises the issue of margin calls.

My weekly newspaper colum is featured in the next post. This week I drove from San Antonio to Laredo through the Eagle Ford shale area. The traffic on the way back Friday afternoon was ferocious. And the traffic was all trucks, virtually no cars. Eighteen wheelers, pickups, and oilfield trucks in abundance.  There were signs of massive activity everywhere. But oil dropped $2.33 Friday, not a good sign. 

The News

Last weekend we calmly and confidently predicted that The Recession had begun.  We are now a FIB five years from the top in  2008 and a FIB 13 years from the top in  2000. The weekend WSJ proclaims 

Americans  in recent weeks have cut spending in everything...suggesting a renewed skepticism in the economy after a resilient start to the new year.

Consumer Show Fresh Caution.

That resilient start to the New Year is a 40 year echo from the resilient start to Year 1973. You have been reading our prediction on this for months, it is arriving now. Toby Connor at Gold Scents suggests that as things slow, Bernanke, and the rest of the Central Bankers can only do one thing, print more money. It has already started in Japan. Another front page article in the Weeekend WSJ has our Treasury Warning the Japanese

not to hold down the value of the Yen to gain a competitive advantage. After al that is what we want to do and we cannot have the Japanese beating us to it. 

Treasury Warns Japan on Yen

And so the race to de base currencies, trying to gain a competitive advantage, among countries is well under way.  Again as Toby Connor points out, the only result here can be more money printing inflating the value of commodity prices. Every stock market run to the upside is accompanied by a flurry of commodity price increases, remember oil at $145 in July 2008?  Bob Prechter's group will be right about deflation but after a final move up in prices over the next few months. 

There are no more markets, only Central Bank Interventions.

recent comment echoed by a Market Perspective Reader

How Bear Markets Bottom

Crashes happen near the END of a bear market. In 1987 stocks had been falling for well over a month, and then that Monday in October crashed. In 2003, same thing, the Trade Center bombing brought a final crash.

 At that point investors give up all hope, tossing perfectly good securities onto the trash heap that they paid much more for only a short while back. This typified the 2003 and 2009 bottoms. A final capitulation triggering stop loss sell orders occurs. Amateurs dump holding with market orders into a a no bid environment plunging prices irrationally further. JNJ is about a blue chip as they get, take a look back at what happened. Note maximum negativ mood actualy occured on the third wave lower. The fifth wave would mark THE low in price however.

Johnson and Johnson 1987 Crash Low

I chose Johnson and Johnson as it is the bluest of clue chips, a fabulous money making machine with an ethical management. However investors tossed the shares overboard, note the gaps in the chart, selling the stock at a one third discount from where it had been at 62. This is also known as Capitulation. The above pattern amy well be what lies ahead for gold and silver. Certainly the trends are still decidedly down. 

Media coverage of the event becomes hyper negative. Gold Sinks Into Bear Territory. Every single gold bug and well respected gold blog has been dead wrong about the near direction of gold, calling for lows all the way down including TMP. And so formerly respected experts fall into a Rodney Dangerfield lack of respect. I now receive far fewer e amils than I did around the correct call for a top in September. Then I was right, since then wrong. The correct call would have been to short GLD using the weekly PAR SAR indicator, we would still be short using that indicator. Whether we had shorted GLD or bought puts we would be way ahead of the game, and my daily number of hits would far exceed where it is now. I promise to observe the weekly parabolic in the future. Regrettably the human condition is such that we learn from errors not success. 

 

So do the charts appear in capitulation format according to formula?

 

GLD Paper Gold

Volume has soared in all the metal plays. Are there any sellers left? At far right volume spiked to five times 5X the normal 10M per day volume. A gap occurred in price in an attempt to fill the massive sell orders. 

For perspective, here is how the 1987 stock crash played out.

1987 SPX

The charts are remarkably similar to the crash point. Whether this is a valid analogy remains to be seen of course. 

 

GLD Fifteen Minute Chart

Early Friday volume was runing 6 Million shares, perhaps 10X or more normal volume.

Then the last half hour, buyers emerged, was that significant? 

GDXJ

Big buying volume emerged at day's end. Monday will be interesting, perhaps a bounce to the upside?

The other really interesting thing about this is that physical gold ended the day on its dead low down like $84. But GLD and GDXJ did not, okay not a big difference but a divergence nevertheless. However in looking at last weekend's update we noted the same  end of day buying which did not keep the market from crashing this week. 

Central Fund  ended the day at a whopping 5.9% discount to the NAV. For $17.58 one could buy $18.68 worth of gold. While I do not have access to a  long term chart on discount / premium for CEF, it is highly unusual for it to trade at such  a discount. This is an example of an extreme.  Is that capitualtion or irratonal valuation or the start of a massive move out of metals?

Central Fund

Central Fund takes out its 200 week Moving Average. 

I read several blogs and updates this weekend.At this point no one knows if the metals

 - are where stocks were in Fall 2008 with a lower low still ahead

- or are like stocks in 1987 with a washout finally done so a slow climb back can begin. 

We will update. I suspect  the best place to watch these gyrations is from the sidelines with no current position in metals. As one reader noted in our opening comments, one has no way of knowing what the Big Banks will do next, and the Federal Govt allows them to do whatever they want. 

USO Paper Crude Oil

Is this the start of a 2008 type fall in oil prices?  See my article to follow in the next post.  

SPX 15 minute chart

Dick Arms was not kidding, note the volume spike at the end of the day. And it happens everyday, gee do you suppose Ben calls the boys at Goldman and says right about now would be a good buy point?

 NYSE Summation Index

I paired the NYSE summation Index with the SPX simply because most are more familiar with the SPX numbers. Stocks typically top into tax day which is Monday but stock indexes remain in strong upward postion. The Summation Index suggests we could see correction.

US Dollar

The US Dollar is at the top of its weekly range. the 13 week MA is no where close to breaking down through thee 34 week MA. So the US Dollar remains strong.

TLT Bonds

Bonds broke to the upside and the MACD is turning up.  

hanks for reading The Market Perspective

[email protected]

 

 

 

The Market Perspective bases its information on techniques and sources that have been found to be reliable in the past, and The Market Perspective tries to base opinions on sound judgment and research, however, we do not guarantee that future results will match past performance ands no guarantee can be made that advice will be profitable. The Market Perspective accepts no money for stock recommendations and is purely motivated by its own research in recommending any stocks.  Put another way, the responsibility for decisions made from information contained in this letter lies solely with the individuals making those decisions. The editor and persons affiliated with The Market Perspective may at times have positions in securities mentioned.  Nothing contained herein represents an offer to buy or sell securities. The Market Perspective encourages investors to be diversified, and to maintain sell stops and risk control over their valuable investment capital.  No guarantee can be made to the accuracy of text or charts.