NFTRH; Market Notes

With events in play I thought we should have a market update as opposed to the usual ETF update this morning…

US Stock Market

The Republicans won, to no one’s surprise.  Also unsurprising is that the stock market is finding this palatable and cheering… just as it cheers the destruction of the saving classes and the enhancement of the investing classes.  In other words, it’s a bull market and all the news is being perceived as good again.  That little squall coming out of the Semiconductor sector was so… October.

The media are busy talking about which stock sectors will benefit from the Republican victories and of course seasonals are very positive.  The setup is there for non-stop bullishness.

Now, let’s see if the reality matches.  Due to technical parameters we have called the market ‘out of the technical trouble it found itself in in October’, but interestingly, a contrarian bearish setup for a test of the October bearishness could still manifest in November.  Let’s just be open-minded to it is all I am saying.

Bottom Line

It is bullish.  We know this and now so too does every white knuckled refugee who was puking up stocks in October.  Back to over bullish and impenetrable.  That in itself can one day be the market’s undoing because its case seems bullet proof; pro-business elections, positive seasonals and policy making on a global scale designed to boost stock markets.  It’s back to as good as it gets!

Gold & Gold Stocks

As for gold, it is down 23 and change at 1144, with 1180 now getting further and further away.  There are those managing the crash as if it is a 4 or 5 day thing and others projecting a long grind down into the spring of 2015.

Personally, with the way I have observed this market work over the years, I think there is a chance to get the ultimate destruction over with in a terrible capitulation sooner, rather than later.  But here again, we will take it day to day, week to week.

Gold is, as we have been noting since 2012, in the mirror to the stuff going on in the first 4 paragraphs above.  It is an anti-market and a risk ‘OFF’ asset in a world that is now habitually risk ‘ON’.  This is unsustainable, with the question being timing.

We live in the here and now, with our brains analyzing things in real time.  This needs to be balanced out with longer-term perspective.  Something has engaged, but we need to let it direct us and not try to guess what its timing and ultimate price levels will be.  We have targets for general perspective.

If HUI loses 150 for example, we have perspective on an outrageous target of 110 or so.  That is not a prediction, but it sure is a measurement that has been there since 2012, when the H&S completed.

Silver & Commodities

It’s not just gold of course.  Silver, dropped below 15.20 this morning.  Crude oil is tanking and copper is still weak.  Uranium, Lithium, REE, Platinum… all positively correlated to economies and all weak.

The message is that despite a deflationary pull, policy making is compelling capital into equities.  This has the feeling of a bubble (in policy making and in the market’s mindset toward policy) and bubbles tend to pop.

Why call it a bubble?  Bubbles always seem to have a strange narrative or paradox about them.  In 1999 it was that brick and mortar companies were a thing of the past and it was all about the internet companies.  Today the paradox is that they are inflating to beat the band, all around the world, and yet there is no inflation.

But as of this moment, it is an intact bubble and an intact story.

Bottom Line

The stock market is right back to where it was late in the summer, sponsored by over bullish sentiment and unbroken, technically.  A new wrinkle is a positive in that the seasonally strong period has now engaged.  A negative is that everybody knows this and it is getting mucho airplay in the media.

Going the other way, everyone hates gold and hates the miners even more.  As long as the bubble surrounding policy and market players’ perceptions holds up, it’s a negative.  But when that bubble breaks…

It’s a week-to-week management regimen going forward.  Things are in motion.