The Market Perspective

A Tide of Deflation Hit the Investing Beach Monday

Tuesday Sept  22 2020

One of my 12 steps in Conquer Accounting is to adopt a pattern of reading investment websites as well as the WSJ every day.

Today's Tuesday issue is a great example. Let's get started

On the back page fellow socionomist Peter Atwater is quoted commenting on the GM Nikola deal

at extremes in sentiment even th4 adults in the room capitulate and want to join the kids. Nikola was recently valued at more than Ford. As Peter notes this is typical top of the market behavior. The article cites Enron, Worldcom, Madoff and the disastrous Time AOL deal, later the largest write off in history to that time.

A front page article has short seller Hindenburg accusing Nikola of making exaggerated claims about its technology. The CEO has resigned. Nikola has lost a third of its value since the report came out and dropped 19% Monday

Even Jeff Katzenberg is having trouble signing clients for Quibi, yet another streaming service in a crowded field.

My investment weblog https://professorelam.typepad.com/markets/

spent the summer warning of decreasing breadth in the stock markets Today is the autumn equinox, often a time of shift in markets.

The DJIA was down over 900 points intra day Monday. Gold dropped $51 by day end. Silver dropped 10% on the day. Crude oil dropped 4.3%. Energy and Energy Service shares were hammered.

A judge in Michigan rules that ballots postmarked Nov 2 can be counted up to 14 days later. So expect Michigan to not report election night. See the mess coming with mail in ballots?

Daniel Planko claims the free market can deliver free college. He compares Higher Ed to the brokerage business in 1999 when a trade cost $200. .Today trades are near free. Brokerages found other ways to make money. But it is hard to see how the existing college system can do that, certainly not with the high fixed cost it carries today. I have warned Higher Ed could go the way of the whaling industry from 1848-1858.

Another article w Your Company Health Plan Isn't Safe in a Biden Presidency, Kamala wants 100% govt take over, yikes.

Cruise Lines want to sail again but the CDC says the crowded conditions are a hotbed for transmission. Carnival wants to sell 18 ships, to who I wonder?

An interview with hoteliers in the SA paper Sunday suggests to me we are not grasping all the economic effects of this pandemic. Hotel occupancy is about 30%, 60% is break even. Property taxes are still at 100%, no discount for low occupancy. And airlines, hotels and restaurants are all linked. Throw in cruise lines and those are whole industries on the verge of BK.

Harley Davidson gets a new female CEO from the Food Industry. She will have a steep learning curve to the powersports industry. I would guess HD has topped out in terms of market share.

check out Deflation.com.

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OIl Drops Five Straight Days, A Bottom in SIght?

1/14/2020 Tuesday

The headlines look terrible for oil prices, so are we closing in on a bottom?

USO an ETF for oil can be tracked intra-day on stockcharts

240 min chart USO

Okay this is but a  .66% move up but this is about where I expected some support. Note the bap in early Dec at far left, we might have to fill that yet. But time to start looking for a low.

Natural Gas

Okay it is only .23% up but amid these terrible headlines, this is the sort of thing to watch.

Iron Ore CLF

 

CLF advanced 3.95% today right off its trend line.

Tanger Outlet Mall SKT

 

One can hardly find a parking spot on the weekend, SKT pays a 9% dividend, an everyone hates brick and mortar retail.

SKT Weekly

 

The moving averages have not turned up yet but are converging. It may take another dip or two.

Nustar NS

Bill Greehey bought $15 M of NS stock recently at the $28 level.  It dipped after he bought but is rising wel.

William E. (Bill) Greehey. Bill Greehey is Chairman of the Board of NuStar Energy L.P., and NuStar GP Holdings, LLC, both of which are based in San Antonio, Texas. NuStar Energy is a publicly traded master limited partnership that is one of the largest independent liquids terminal and pipeline operators in the nation.

now

The weekly chart shows why Bill is interested in NS breaking the $28 level.

I remain bullish energy. The trend in the USD has turned down on the daily chart. This will be suportive of higher energy and iron ore prices.

Thanks for reading the Market Perspective.

 

Commodities Finally Attempt Break out,Bond Yield Rise, Copper Price Firms

Weekend Dec 7 2019

 

I believed oil prices would bottom this fall, and it appears the process started with a low last August.

Now commodity prices in general appear to be breaking out

GSCI

I drew the parabola a few weeks back, one can see at the arrow it is challenging the neckline of the inverse H & S parttern

I expect a break out. We will show other charts that seem to confirm  this idea.

After a negative news release, Apache fell from 23 to 19. It jumped 7.6% Friday to 19.99. Could that last bit of bad news have formed the bottom?

XLE Energy ETF

This triangle should break out to the upside, nice 19% move up Firday.

XES is up  6% for the week.

 

As Richard Russell used to say, weekly charts are more important than daily. Here XES had a great week, and the PMO  has crossed to the upside.

Energy service has been the laggard so this is very encouraging. PTEN jumped 9.66% this week. Time to buy.

Nustar NS

We mentioned Chair Greehey bought $15 M worth of NS.  It is challenging  its 200 week MA. I expect it will vaut that in the next couple of weeks.  Again, bullish for energy sector.

Energy Trusts

 

Prudhoe Bay  Trust         BPT        +6.88%

Canadian  Natural Res    CNQ        +4..64%

Encana                        ECA            +3%

Kimbell Royalty            KRP            +..69% but had risen all week

You get the idea, positive results

Alerican AMLP did not really join the party up  .52%, the precent increases above are in price.

Investors are buying copper and stocks while selling bonds and gold.  This is bullish for some retailers, we like Tanger Outlet Mall SKT sporting a far 9.23% dividend yield

The outlet mall Tanger operates in San Marcos, TX is one of the five largest tourist attractions in the state.  After years of sell off with the concerns of on line shopping, this looks favorable

5 16 PM CST

More to follow tomorrow

Looks like energy  is shaping up really well for the New Year

 

 

 

 

 

 

Markets at Important Juncture

Weekend January 12, 2019

 

Stocks have re traced 50% of the entire fall from Oct 3.  Has this been a vigorous counter trend rally or is it safe to go long again?

This next week wil likely tell the tale.

Hedge Fund A Bear Fund

The two hour chart fell with the 2,000 point rally from December 24. It has returned to a slight up trend line.

NYSE

NYSE completed an A B C rally to the  38% level. PMO at bottom could top here.

Russell 2000

The Russell index of small stocks has rallied right to its 50 day MA.Many of he indexes look like this.

Bullish Percent  150 day MA

 

This indicator could repeat its failure at the end of November by not crossing the downtrend line. is it is we have lower highs and lower lows.

 

MNYSE Advance Decline

 

Our most reliable indicator has rallied in classic bear market fashion but could very wellfail at this downtrend line.

A Preference for Bonds Over Stocks?

 

The last two weeks of stock rally pulled this ratio chart down.But the MAs are all moving up. For now investors are liking bonds over stocks.

Gold

An article in the WSJ headlines Gold is Headed for $1,300!  Nothing like that was being said at $1,180 in August.The indicators suggest other wisse. A re test of teh 200 day MA at 1254 looks likely  Gold is overdone short term.  This should set up a nice point to buy in the next month or so.

 

Silver

 

Maximum mood occurs at the end of a move, note the recent sharp rise as the public rushes to buy at the top.

Silver is likewise overdone short term. a re test of the break out at 15.00 could occur here with a buying set up.

DZZ is a short gold fund and might be worth buying some shares here.

More posting later.

 

 

Okay Despite all the Headlines, the Markets are back to Last Thursday

Thursday Dec 27, 2018

 

The two hour chart does look like this is the start of a  relief rally  after the Nov Dec decline.

 

PMO at bottom and On Balance Volume at top both appear to have bottomed and are turning up.

At the same time GLD has rallied and looks very toppy short term to me.

And the US Dollar strengthened so gold is pulling back a bit on that as well.

Silver took off yesterday, did anyone notice?

Silver has apparently finally made a bottom while gold rose to a new high.

I have illustrated the extreme number of new lows in the last few posts even suggesting a look at the new lows in the WSJ was a great indicator.

New highs versus new lows finally made a bottom  Wednesday. Social Mood switched and the market rallied.

NYSE Advance Decline Daily

MACD and RSI have reached extremes to generate a low and probable reversal.

Among the economy ETFs I would suggest XLF Financials and XRT Retail, both have been beaten up.

And now that the FAANG stocks have been beaten down, how about SOCL global social Media ETF?

Bottom Line

I suspect we are still in bear markets for stocks and energy.  The extreme over sold condition should generate a counter trend rally in equities and energy in to mid January. But frankly that is about all I am expecting. This same period should see silver finally holding above its 14-15 level so it can join gold in a rally for  2019. Wheaton WPM and Kirkland Lake KL both had intra day reversals at  new high price area yesterday also suggesting some correction ahead in the mining stocks.

Energy I suspect is just bouncing off a lower level.  Don't get too optimistic that the worst is over for energy.

The big rally of  1,000 points got the 30 minute charts over bought, DJIA down 400 in pre market this Thursday morning so let things cool a bit and watch 30 minute and hour charts for best entry.

Dollar Completing Five Waves

Wed Nov 14 2018

 

Gold and oil are bottoming as the US Dollar completes a fifth wave of five to make a top. Sure enough the media are agog over the strong dollar but that makes a market top.

 

This is a textbook five wave pattern.

 

Gold is taking longer to bottom than I thought but it is happening. This should be a pullback before a more spirited advance begins, watch the chart of UUP.

 

Ratio chart of gold to the US Dollar via UUP

 

This chart falls when the USD is out performing gold. It rises when gold outperforms the USD. One can see the bottom was recorded in August.  The ratio is making a higher low now.

Patience.

Social Mood Taking Negative Turn, Transports, RUT not Confirming DJIA

Weekend November 10, 2018

I am sending much better lawyers to expose the FRAUD (in Florida)

Trump on Twitter regarding Florida recount

I took a yellow highlighter to various articles in the Weekend WSJ, here are a few snippets

 

Florida repeats the heated 2000 election results

White House Tensionis  Grow over China

Gab to Reign in Calls for Violence

Trump Calls NMacron Comments Insultijhng ahead of Meeting

Trump Fires Sessions

Britain struggles with Knife Attacks

The Blue Wave Breaks Gently

America Could Use Some Deals

Eurozone's 19th Nervous Breakdown

 

All told social mood is trending negative world wide and it shows in the markets.  The New Civil War we have discussed so many times has taken on a renewed vigor.

While Nancy and Steny are no doubt savoring new found power again, they may be surprised at the community organizing efforts of the new Congressional Members. Look for an unforseen bid for power in the Dem ranks.

 

DJIA versus Transports

Dow Theory dictates that both indexes need to make new highs or lows to confirm a move in one direction.

But the Transports in purple are not confirming the move up in the Industrials

Note the downturn in the Transports in fact right at the DJIA 200 bar MA.

Russell 2000

The small cap Russell  2000 looks strikingly similar to the purple Transports above. Notice RUT did not even get close to challenging the  200 bar red MA, and the shortest MAs are already turning down.

%  Above 200 day MA

This indicator is hesitating right at the 52.5% level. And it is nowhere close to its Sept peak. 

I believe evidence is building that a market top of some significance has occurred.

TLT Bond Prices not Recovering

There was no rush to safety in bonds during the October sell off. This is another reason to doubt that the markets are AOK now.

Weekly TLT

The more important weekly chart looks worse. Price is well under all the MAS and the MAs are converging and about to turn down, the typical way trends change.

US Dollar

The USD is between 50 and 61.8% re tracement which suggests a top might well occur in the near future.

Gold via GLD to see 2 hour chart

The strong dollar beat gold down but it is still in an uptrend. I am still bullish on gold.

Crude Oil

Bullish Percent Energy

BPENER got whacked with the stock sell off just as it did last February. It has rebounded to those February lows which are now some resistance.

XLE versus XES in purple

Here is a graphic of what I mentioned in the column posted Friday. Energy Service in Purple is not confirming any recovery in XLE Energy producers. And XES has been falling since April. Somehow the market senses what might happen.

 

Crude Oil

Crude oil weekly has fallen below its 34 Exponential MA. And PMO shows no signs of bottoming

Did anyone notice the article about OPEC dissolving with the Saudis and Russia going it alone?  No doubt that would result in a production free for all, not that OPEC ever regulated anything anyway. No wonder price is falling just as in  2014.

Bottom Line

Evidence builds that a significant stock market top has occurred. No recovery has ever lasted longer than the ten years this has been in force.

Interest rates are rising, bond prices falling, and numerous cities and states are in serious trouble with pension obligations.

Gold and  the XAU need to hold these levels and recover. Hopefully that will happen amid a US Dollar top.

Finally oil, gasoline and heating oil appear to have broken down. Oil has fallen the  20% necessary to call it a bear market.

 

dennislelam@gmail.com

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.

 

 

 

 

 

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.

 

dennislelam@gmail.com

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.

 

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

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. 

 

dennislelam@gmail.com

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.