Weekend Nov 26, 2016
Stocks Move to Weekly Uptrends
Both the DJIA and DJT reverse their weekly trends to up on the close Friday. The S & P and NYSE did so as well.
Our bear case is getting harder and harder to make.
SPX
The SPX dropped right to the200 day MA and then bounced to a new high, a textbook buy signal.
Bonds
Bond prices erased the first six months of gains in four months, and are still falling.
REITs and Utilities bounced this week but not enough to reverse their downtrends.
TBT Bear Bond Fund
TBT is a fund that moves opposite of bond prices. Here the low in yields is clearly identified in July with a violent reversal coming of of that 34 year low in rates.
Closed end municipal funds followed the bond chart erasing all the gains made so far this year.
US Dollar and Gold
The Dollar is on a tear and finally took gold down as well. The Dollar should top when gold bottoms and I expect that to occur
pretty soon. The EUro at 105.99 is apparently headed to parity with the US Dollar. IN 2008 the Euro traded at 160 versus the Dollar., quite a drop as the wheels have come off Europe between Brexit, the demise of the Club Med countries,and the lack of any realistic defense.
HUI Gold Bug Index
The HUI Index has re traced 61% of its gains this year. We are looking for bottoming action.
The XAU has given back 50%.
Gold
Gold matches the HUI coming back 61%.
Gold Parallel Courtesy of Energy and Capital
Iron ore and metals are moving nicely to the upside.
Cliffs Natural Resources CLF
The monthly chart is really just now giving a buy signal. If CLF recovers just half its former price, this will be a great trade.
Oil in Head and Shoulders Pattern
A big 4% drop on Friday turns the trend down for the time being. Will 43 hold on the downside? Not if this rate of decline continues but that probably depends on the US Dollar.
AMLP
The drop in oil prices could take AMLP back to its lower range, let's watch to add at that level.
Stochastics and CCI are both breaking to the downside as well.
Bottom Line
Stocks have generated a Dow Theory buy signal with DJIA and DJT both at new highs.
But, history is clearly indicating that we are in unusual times. Before the election the pundits pointed out that only Ike had won the Presidency without previous political experience, and he won WWII! Cycle wise we are
17 years from the top in 2000
The top in 2000 was 34 years, 2 x 17, from the top in 1966
The top in 1966 was 34 years from the bottom in 1932.
So we have a powerful suggestion that cycles are still converging despite the short term euphoria we have seen in stocks.
And, I noted in this space prior to the election that the bookies are rarely wrong, nor has the Electronic Iowa Market been wrong
But both were in this election, no wonder stocks shot to new highs.
And of course social mood is the most positive at market tops as in
January 1973, August 1987, March 2000, Fall 2007
As noted below the political landscape in most of the world looks terrible, which offers plenty of potential for things to go wrong.
Bonds have seen their lows and are likely to fall much further. Most of the sector is over sold but we are at a 34 year extreme, so TLT could fall further.
Gold, silver, and industrial metals have seen their lows early this year. Positions should be taken. The flood of Central Bank money used to stimulate the economy the last few years will result in the beginning of the inflation we are already seeing.
Oil looks to be pulling back, let's be alert to buy AMLP.
Natural Gas should also do well, the low was 2.50.
Social Mood
Pop Trends Price Culture
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C H Smith examines the backlash against the cultural elites.
And then a summary of Part Two
The ruling elites are becoming frightened.
Indeed, Hillary is above it all, the rules of the Dept State do not apply, the rules of selling favors do not apply, and the notion that the media report news is obviously out the window. Numerous Obama officials are literally married to mainstream media types.
Venezuela, Brazil, and Argentina are all struggling as a result of protective trade policies and ruling elites who failed to deliver. The Western Europe countries are in the same shape, France, Spain, Portugal, Greece, Italy, all are failing to deliver economic growth. Trump's remark about Putin was simply that Putin is popular because he is projecting Russian power, which is true.
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WSJ Editorial Report
This is one of my favorite programs. This weekend is is broadcast Sat and Sun at 2 00 PM CST on Fox News. The Democrats are still in denial about what will work for them. Chuck Shumer boldly proclaimed a fight if Trump did not nominate a 'mainstream' judge to replace Scalia. As Dan Heninger pointed out, Schumer would not consider Scalia main stream. But in 2018 the Democrats will defend five Senate States where Trump won.
Is screaming for a liberal Supreme Court nominee going to defend those seats? As Heninger observed if Trump goes to those five states so tmake his case for his nominee, a center part of his campaign, what will the incumbent Dem Senator do?
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I just completed reading two of Daniel Sliva's Gabriel Allon series.
I read the latest, Black Widow number16 and Portrait of a Spy, number12. Silva better Ian Fleming in that he has the same eye for detail. But his situations are more realistic. While the book is fiction it clearly draws on recent events. Reading them gets one inside the head of the terrorists, and it it not a promising scenario for peace and order. Allon is an Israeli operative with the cover of being an art restorer, which is also interesting.
I bought Black Widow on Amazon but discovered that many of the previous series are available at the local library. Highly recommended reading.
Thanks to an alert TMP reader for bringing this to my attention.
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And we noticed another bit of anecdotal evidence. This weekend we noticed a television ad for Case tractors and crawler machines.
Trace Adkins was the spokesperson. This is new! If Case is advertising on television some confidence is being restored as Trump's popularity is up 10%. Will this pan out or prove to be an example of extreme positive mood at the top of a market?
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