The Market Perspective

New Highs

Weekend Sept 29, 2018

Tom McClellan discusses teh Hindenburg Omen

This signal was created by the late Jim Miekka, who was a mathematician and market analyst. He wanted to improve on Gerald Appel’s “Split Market Sell Signal”, which occurred whenever both NH and NL exceeded 45 on the same day. The adjustments which Miekka made accounted for the growth in the number of issues traded since the days when Appel first introduced that signal, and Miekka also added some other filtering criteria.

I regularly feature Tom's comments but this one is of particular interest. There has been a new record of HOs going all the way back to  1988.

There were 12 HOs just before the February mini crash. Now there have been 10 in September. We urge you to read and notice the chart Jesse Felder created going back to 1988 contained in Tom's update.

NYSE A D Line 10 Months

The ten month chart illustrates the sell and buy signal of last February.  Now this daily indicator is failing again, let's look up close.

NYSE A D Line Three months

This needs to improve qucickly. Recall that October is a prime month for market setbacks, 1929, 1987, top in Fall 2007.

This bears a close watch.

NYSE Index

While the DJIA and Transports have hit new highs the NYSE is lagging quite a bit.

5 Year Yield

Interest rates are on the rise and in a hurry.

 

Silver

Note the big 42 cent or 2.95% spike in silver Friday. Has this market finally seen a wash out and reversal?

West Texas Intermediate

WTIC keeps hitting resistance in the  1970s.

US Dollar

 

The US Dollar has yet to really break down. This is holding price advances in metals and crude oil priced in dollars.

The Bottom Line

We are in the dangerous seasonal part of the year for a stock market break down. Interest rates are headed higher. We are patiently waiting a resolution of the US Dollar to track the next move in metals ad oil.

Social Mood

The 44 minute response by Judge Kavanaugh shows just how far basic civility towards a judicial nominee has fallen.  While Dr. Ford could not remember anything but Cavanaugh's name,, not the place, date, how she got there or returned home. He is quite specific even to a  remarkable 982 calendar. No doubt Dr. Ford believes what she has to say but no one else she names is able to recall her version of the facts. Believe what you want about the two. But I lived through the 1973-74 Watergate breakdown with a similar attack in the media on a daily basis.The markets slowly tanked 50% in two years. Social mood is not in mere decline or tatters it is being torn apart like a Gladiator up against a lion in the Coliseum. The Dems overlooked far more serious behavior by Jack and Ted Kennedy, Gary Hart, Bill Clinton,  and John Edwards.  But this is a Republican.

 

While this sounds extreme, I noted one comment on this at the digital WSJ. The writer wondered if this was telegraphing the final end of the USA as a power.   The Dems have disregarded the concept of innocence until proven guilty. And all the Republicans are not for the Trump nominee either. As he notes, by the time this is done Judge Kavanaugh may not even be able to coach a girls' basketball team.

 

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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 and 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 predictions.

 

Gold Shares Rise, Andy Kessler Warns of High Valuations

Sept 24, 2018

See today's WSJ, Andy Kessler surveys many stocks with uber valuatios a bit like March 2000 and the dot.coms

Bullish Percent Gold

this follows the low set August 16 in gold itself

Stocks on a Tear, Dollar Weakens, Canada and Aussie currencies Stronger, Copper Firms

Weekend Sept 22 2018

We are monitoring the bottoming process in metals. Gold bottomed August 16.   Now commodity currencies of Canada and Australia appear to strengthen with the US Dollar falling. Copper firms, this is all part of the process. 

Australian Dollar

The action the last two days looks to be the strongest since the reversal in January. The currencies of commodity based economies like Australia and Canada need to firm indicating a shift to commodity based inflation.

 Copper

 

Notice the big move in copper. This metal is referred to as Dr. Copper given its economic importance.  I recall reading an article in the WSJ on how weak copper was which reflected on the commodity exporters in emerging market countries. It of course is typical to see such articles when any market bottoms.

Gold The Low was August 16

Such price action is referred to as an exhaustion move, all the sellers capitulate, the few bulls step in and start buying at the bottom in price.

 Mutual Fund

Most technical analysis books were written before the advent of personal computers. Now anyone with a discount broker account has access to programs like stockcharts. Most of the books need to be re written now that all are following the same  50 /200 day moving average charts. Notice here that price over shot the FIB 61.8% re tracement. No doubt there were sell stops at that level. I believe this Rydex fund bottomed just after the low in gold August 16.

EBAY

Ebay looks to be bottoming at the 50% re tracement level.  Notice MACD at is bottoming, see blue arrow.

Rio Doce

Here is an example of why one needs to be accumulating now Once the train leaves the station it is hard to find a good buy point. This firm is in the iron ore business.

GSG

Here is the break out on GSG. It is till cheap.

GSG Correction Complete

 

GSG completed five waves up into 2008. Notice the shape of the final fifth wave was parabolic which is an ending pattern. Following that we have had a nine year  correction which is ending now. The correction followed a textbook  A up B and then a final C wave down. The first of the next five waves up is occurring now. The Central Banks of the World have  engulfed the world with enough cash and borrowed money to fuel a  1970s type inflation all over again. 

 

Hm the top in inflation was 1981, ad a FIB 34 years and you get 2015-2016.  Notice that is exactly where wave C has ended in  2015 - 2016

Energy and Stock Prices Rise in Tandem

Friday Sept 21, 2018

Energy and Stocks Set New Highs

The blue chips surged more than 250 points to cap a three day run of gains the latest leg of a nine year rally that hurtled the index to its first record close since January 26.

Headline WSJ today

Energy Secretary and former Texas Governor Rick Perry has credited Saudi Arabia and Russia with avoiding a ‘spike’ in oil prices. Presumably Secretary Perry believes that the two have increased their oil production to offset the decrease from banned Iran.

We can be sure Mr. Putin is pumping every barrel he can at $70. Russia really has no economy other than its energy section. Have you ever bought any product labeled Made in Russia?

The truth though is that oil is both an economic and a financial commodity.   Oil prices have been positively correlated to the stock market rise this year. Investors in an expansive mood are betting on higher stock and oil prices. Indeed in a booming economy, high oil pries can be afforded and so the price increases.

Crude oil prices in the Permian Basin are trading at a discount to the New York Mercantile price. The supply has overwhelmed the ability to move the oil to the Gulf Coast Refineries. This is boosting production from 1.1 million barrels per day to 1.5 mbpd in the Eagle Ford.   The Eagle Ford is much closer to Corpus Christi and the Golden Triangle area so it is easier to ship the oil out.

And there is more good news for Texas. It is no accident that the TV series Dallas featuring loveable rogue J. R. Ewing took place in Texas, not Denver.

And there is more good news for Texas. It is no accident that the TV series Dallas featuring lovable rogue J. R . Ewing took place in Texas, not Denver.   Environmentalists want to put Colorado out of the oil exploration business altogether.

Proposition 112, on the November ballot, would restrict new energy development within a 2,500 foot radius of any building, playground, body of water, or Jane Fonda when she visits the state. (okay just kidding about Jane) This would cut state oil revenue form $200Million to possible $1 billion. Some 145,000 jobs might be lost along with $218 billion in GDP. Democrat liberal Gubernatorial candidate Jared Polis opposed fracking in the past but now claims he does not support 112.

This is a project of a group called Colorado Rising but if it passes it looks more like GDP Falling. The usual out of state suspects like the Sierra Club and Greenpeace support 112.

If this passes expect Rising to migrate to other states. But I doubt it would pass in Texas, the home of J R Ewing

Dollar Index Slowly Falling, Metals Hit 5th Wave Low

Weekend Sept 15  2018

The Dollar is slowly rolling over. Metals appear to be making a bottom.

Dollar versus Hecla HL

HL is in gold with the scale at left.  HL has collapsed from its 2011 high of  10.5 to under 3. It is trading below book value. 

 Long Term CEF

The point here is to show that silver via Central Fund is in a long term uptrend and has now returned to that uptrend line. 

The Thirty year Bond yield is back over 3%, rates bottomed in 2016 and have been rising

Goldman Sachs Commodity Fund

GSG bottomed in 2016 and continues to rise. Again this boosters the case for metals to advance.

Crude OIl Broadcasts the same picture. 

Should the rally return to the previous high most mutual funds of gold shares would triple from here.

If OPGSX returned to its 2011 high, it would be a bit more than a triple from here. If you have access to such funds in a retirement account this should be a good opportunity to accumulate shares. 

Central banks all over the world have flooded countries with currency. Emerging currencies are falling hard already, see my newspaper article in  the next post. An op ed in the weekly WSJ  on page A 15

Get Ready for the Next Financial Crisis

makes just that point.  The world has more debt out now than before the  2008 financial crisis.  Tesla bonds are now down to 84 cents on the dollar. Emerging country currency and stock prices are sagging. Some like Venezuela and Argentina, heck throw in Nicaragua and Bolivia are in crisis mode now not to mention Turkey and hey Greece is back in the headlines. So the clues are all here to see. 

Bottom Line

This is the time to accumulate commodity related investments. Look for an increase in inflation, interest rates, and metals prices. 

I was wrong that stocks were topping, they are still soaring.

 

Social Mood

Everyone owns Apple. Over half its net revenue comes from I Phone sales. The price of the cheapest latest model is like $799.Upscale models are near $1,000.  I own an LG MX 150 I bought at ATT for 80 bucks, case for  5 bucks on Amazon.

The FANG stocks have powered the NASD to what, 7500. Well swell, but I think the commodity play, beaten down as it is, offers far more upside potential and little downside risk. 

AMZN is trading at a 156 P/E.

 the forward P/E is a mere 77. Okay Bezos has finally been proven right but

I recall when Apple was trading for $600.Every talking head on CNBC was certain it was going to $1,000, just a question of how soon. It went to $400. 

In the 1970s it was the Nifty Fifty. Before that it was IBM. In the  1920s RCA. Now FANG.

When the crunch comes in those stocks there will not be time to get out. 

Woody Allen's first movie was titled

Take the Money and Run

If you are in a FANG stock that is what I would suggest. 

Best J R Ewing Roll the Dice Bet

JNUG

Should JNUG return to 130 it would have increased by 18x. Not for the faint of heart. This is a dramatic example of why Bob Prechter constructed the concept of endogenous social mood. When JNUG takes off, all will wonder why.But the truth is that the mood towards metals will have reversed. 

 

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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 and 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 predictions.

 

 

The Big Picture

Monday Sept 10, 2018

The Big Picture

Tom Bowley featured this chart on his stockcharts blog.

AS he says the market cleared a long term hurdle in  2012. This suggests  the market might repeat the 80s and  90s.

Stocks, Energy Topping for Now

Weekend Sept 9, 2018

NYSE Advance Decline Daily

This looks a lot like last February when the market took a short term dive. Markets are extended and there is no lack of uncertainty with the election 60 days off.

BPNER bullish percent energy

The BPNER has already corrected. This indicator seem to run ahead of the oil price. That suggests a low in energy prices this month.

Interest Rates

After correcting since May, interest rates look ready to rise again.

Gold

 

Gold looks like buying is coming in around 11 80-1190. I am looking for an entry this month.

XAU

The AU index of gold miner stocks is in free fal. It could go further to 55, a high made last October. This is the sort of  no one wants to own it that precedes a bottom. NOte the near triple from the January 2016 low.

 

Bottom Line

It may be that stocks do not bottom until after the election but odds are on for lower prices in the mean time.

Looking for lows in energy and metals in the next few weeks.

Social Mood

This article from Real Clear Politics seems to sum up the uncivility at the Kavanaugh hearing this past week. If the Dems take the House expect that sort of thing for the next two years.

https://www.realclearpolitics.com/articles/2018/09/09/how_the_senate_lost_its_decorum_138025.html

 

[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 and 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 predictions.

Evidence Mounts for Stock Correction, Record High in Gold Silver Ratio

Thursday Sept 6, 2018

 

Evidence continues to mount that stocks made their seasonal high at the end of August.

DJIA

I am writing at  11 00 AM CST but notice the sharp intra day reversal on the two hour chart.If that ended wave two up we should see a lot more downside action if a wave three basis the two hour chart is unfolding.

Gold silver ratio hits lighest level since 2008

Silver to Gold Ratio

The silver to gold ratio has actually not hit the same low as in 2008 but it is close.

And there is a lengthy article in today's WSJ on how the weakness in silver reflects world economic weakness. Such articles typically appear at market lows.  Gold has held its rebound to $1,200 so far but needs a lot more to turn the trend up.

 

 

Dollar Firms Taking OIl and Silver Down

Wednesday Sept 5, 2018

Crude oil shot  up and then gave it all back.We use XOP as it has intra-day display and WTIC does not.

The sharp move up created a gap which was closed and reversed by day end. And that broke the up trend. And PMO is turning down.

Silver re tests 2016 low

Silver is re testing its 2016 low.The break down yesterday like hte spike low in June of  2017 may be a precursor for such a low.

Central Fund tests late 2016 low

CEF is within a few cents of its 216 low just under 11.50.

 US Dollar at Decision Point

the US Dollar has come back half way into its last high. The MAs have converged suggesting this is a do or die moment to determine more or less strength.

Technicians do not speculate on political outcomes. But the impasse with Canada with an election close by seems foolish.  Resolving that would be a plus and perhaps  put in a top for the dollar.

Meanwhile we posted Tom McClellan's suggestion that stocks could see a repeat of  their  1994 sell of beginning August 30. So far that is the case.

 

Potential Top in Stocks Forming, Potential Botttom in Metals

Weekend Sept 2 2018

Tom McClellan Deja Voodoo

I often begin with a link to the McClellan weekly chart. This one seems particularly important.

I don't know how he finds these analogies but this chart compares the first two year of Trump with the first two years of Clinton. The  parallel is remarkable. It calls for a top August 30. And indeed the markets reversed Thursday and did not particularly rally Friday. Some of the indices have made new highs the DJIA  has not. In my weekly newspaper column I discussed other factors. The mid term elections really don't start until after Labor Day and we are there now. There is considerable uncertainty there. If the Democrats take the House they will surely attempt to derail Trump with Impeachment. Yet in 1994 the market bottomed in December and then took of again.

Elsewhere emerging country currencies are being crushed by the US Dollar. A strong dollar is usually hard on gold but it may be that gold is coming back as an alternative currency.

 Gold versus the Dollar

This is an update on the comparison chart from last week. We do not have a crossover of the EMAs for godl but it is above $1200 support. The PMO for gold is turning up. The Dollar has not convincingly turned down yer.  As gold is priced in dollars, the red black bars are a ratio chart to the dollar and again it has not turned up yet. Priced in Euros gold has not turned up yet either. Silver is the same. The XAU of gold mining shares looks the same.

WTIC

This looks like a head and shoulder top. Crude would need to take out the July high to signal renewed strength. For sure there is not lack of crude oil in the world. A weaker dollar might help.

NYSE Advance Decline

We do not have a turn down here yet but the end of August looks like the end of January.

Emerging Markets

 

Emerging markets are getting crushed along with their currencies.

Something is Terribly Wrong in China

China never recovered from  2016 as the US did. And now Shanghai has turned down again on the weekly chart.   Apparently there are over building to keep employment up and a questionable accounting system are coming home to roost.

TSLA

A lengthy article in the Weekend WSJ  questions the judgment of Elon Musk. Others suggest he needs a real automotive guru running things.

Technology

Technology does not look like a buy here. OBV has hit the same high as it did in March leading to a needed pullback.

 

Bottom Line

There are reasons to expect a correction there in stocks. We do not have official buy signals in metals but a bottom could be forming.

Social Mood

https://dailycaller.com/2018/09/01/judge-jeanine-jeff-sessions-resign-immediately/

And article in the WSJ this past week reported Sessions circling wagons by having some of the Judiciary over to his private dining room for breakfast. But mood seems to have shifted with Lindsey Graham suggesting Sessions should go after the election. This is a big shift for Graham who previously said it would be impossible to confirm another AG. That may also be the case if the Democrats gain the Senate. 

Here in Texas Beto O'Rourke is out raising Ted Cruz in money and has yard signs all around my neighborhood. There are no Cruz yard signs nor students wearing Cruz t shirts on my campus, but I did see a BETO shirt. Trump is promising to campaign here for Cruz. But the Cruz campaign at this point looks terribly weak. BETO is of course campaigning as a moderate which he is not. He is for impeachment of Trump.  The big cities in Texas, Houston, Dallas, El Paso, and San Antonio all have Democrat Mayors.

Finally taking back a Senate seat would signal a big shift. If Democrats  ever control Texas again, it is over for the Republicans as the Dems would have CA, IL, NY and Texas just for starters in the electoral college. That could put them back in love with the EC.

https://www.wral.com/beto-o-rourke-dreams-of-one-texas-ted-cruz-sees-another-clearly-/17809047/

[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 and 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 predictions.