NFTRH; Macro Review & Gold Stocks

The headlines are talking about markets being down on Fed rate policy fears due to employment cost increases, declining consumer confidence, Argentina this and European deflation that.  In other words, the headlines are coming out with reasons why a market that was heavy to begin with is down hard a day after the Fed rolled over and committed to its ongoing inflation.  They always need a story.

How about that the market badly needed correction of the rampant risk taking, and now risk continues to come ‘OFF’ as indicate by the speculation barometer known as junk bonds.

hyg

Momentum stocks have been rocked of late and the Semiconductor index has been correcting for over a week now.  In other words, this looks like the summer correction that we have fully expected and anticipated.  If SOX goes below 560 (long-term support) we can start talking about the end of the bull market.  Until then, it is just a correction if this macro indicator is a good guide (and it has been ever since it broke above 560).

sox

Meanwhile, the precious metals are on point as well.  The proposed buying opportunity in gold stocks seems to be at hand.  While daily HUI is in a funky looking (not in a good way) short-term pattern, the preferred support is not too much lower at around 225 (+/-).  This is based not only the daily chart, but also and especially the weekly charts we review each weekend in NFTRH.

hui

I have picked up a few items today, but this is against protective hedging.  HUI could hold support around current levels, but the reason we have 220 to 225 on radar is so that we will be prepared for it.  These are opportunities, if the current macro view is correct.

As we have noted all along, the preferred fundamental environment for the gold sector is when speculation in other areas starts falling apart and then eventually, on a counter cyclical environment.  There is a reason gold went counter the bull party a couple years ago and that is to provide liquidity for people (along with their worthless currency of choice) when risk goes fully ‘OFF’ one  day.

As always, if you have any particular questions, just pop me a mail at the ‘gt’ address.