Weekend Nov 22, 2014
Elliott Wave calls a buy signal in gold.
A reader in Australia reminds us of the Hugh Hendry mis step in the market.
Draghi and China stimulate the markets.
OF Two Minds suggests Central Banks have panicked. If the economies are so good why are they over board on stimulus?
But what if the fourth bubble can't reach the heights of the third bubble? What if the debt and leverage required to inflate the fourth bubble breaks down before the fourth bubble can even reach the heights needed to make everyone who bet the farm on the status quo whole? Smith makes the pint that we are on the third bubble since Year 2000. What if the Central Banks cannot pull off a fourth recovery effort?
The lead article in the Weekend WSJ is
Central Banks Move to Boost Global Growth. But all they can do is buy bonds and lower interest rates which are near zero now. This money has found its way into world stock markets but not the employment market where many have just quit looking. This si precisely the point Of Two Minds is making. This is not working now and why would a rescue attempt work next time. After all rates are already rock bottom.
Bonds Break to the Upside
We have an unusual situation where both bonds, oil, and gold look higher. This is not the usual combination but these are unusual times.
Daily TLT
I speculated last week the bond market was sensing something in the making, a sell off in stocks, I don't know but this graph looks positive. And the US bond market offers better yields than Europe orJapan.
US Dollar versus Oil
The Dollar is stil climbing but looks toppy based on the turn up in crude oil at bottom. A turn down in the Dollar should boost oil and metals.
Energy
I was thinking XES was in a fourth wave with a fifth down to come. That could still happen but it looks more like XES wants to move higher. We need a turn down in the Dollar to get things going here.
PTEN
PTEN is trading at 1.08 x book value. That is pretty cheap. The stock has been just about cut in half from its highs. It is below all the MAs and the last two days look positive for a pop in price.
Central Fund CEF
During the run up to the 2011 top, Central Fund typically traded at a 4-6% premium to the gold and silver it held. Since that top it has consistently traded at a discount. It now trades at a whopping
10.3% discount to the physical gold it holds. The NAV is 13.02 while CEF trades for 11.67. At the gold dead low with the Dollar awfully high, this looks to be worth trying. There are of course mining shares, GLD and all sorts of speculations available.
And then there is the Stock Market NYSE Shown at top, Summation Index main panel
The summation index in the main panel has not rolled over yet. But the NYSE has ben following the pattern. Typically stocks rally into the Thanksgiving holiday, will the market hold up until then, it has certainly been puffed by Central Bank Money.
The Bottom Line
We look for a rally in bonds, oil and gold. Stocks look poised for a pull back.
Social Mood
Social Mood is in tatters around the world. Merkel points a finger at Putin, Putin re invades the Ukraine, the protests continue in Hong Kong, Obama puts his finger in the GOP eye over immigration, and then there is the Grand Jury verdict to come in Ferguson. Japan officially went into a recession, Hollande is unable to stem the unemployment in France.
The best summary of mood I have read is Peggy Noonan's The Nihilist in hte White House.
They agitate, aggravate, fray, and separate.
And hat negative mood is coming from the White House at the Top of the Stock Market. Let the market drop and one can only imagine the recriminations.
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