Trump Trades Tumbling

You could say (and in fact I did say last weekend) that Peak Trump is indicated by the likes of commodities, resources and materials continuing to weaken.  These are supposedly the things of reflation by fiscal policy.

Peak Trump may also be indicated by the likes of Healthcare and Big Tech outperforming of late (remember, these initially got clobbered on Trump).  The one perceived Trump Trade continuing aloft are the Banks/Financials, but that is a product of interest rate dynamics, not Trump.  In other words, watch how quickly they would do a falling souffle routine if somehow yields were to drop.

Don’t tell me about financial sector deregulation as an instigator.  The Energy Sector and all those regulations due to be repealed, continues dropping (though Energy may be setting up a buy shortly).

I have been wrong thus far in anticipating a decline in long-term yields, but I am being stubborn and still hold my TLT, which along with the now-departed likes of INTC and AMGN recently (and IBM soon to be disbursed), at least pays dividends while I wait to see how this plays out.  Again, right now not looking so good but I’ve got a little more rope left in this contrary play acting as a portfolio diversifier.

Meanwhile, gold promoters are blabbing about how good Trump will be for gold and silver and they are just doing the usual promotion routine; sucking in the gullible.  I took a few quality miners looking for a bounce (that hasn’t)  and hold them still.  That is because I took enough profits earlier and also because after totally screwing up a short on silver, I caught both gold and silver having bounced to the EMA 20s the other day and shorted them both against the miners (the NFTRH advice had been that the sector was in technical trouble, for subscribers to do what they will with).  I covered both shorts today so I guess you can say I am not expecting the end of the world for the precious metals.  In fact, with commodities dropping, a fundamental underpinning is improving (gold vs. commodities, with gold vs. stocks still bearish).  But again, I have patience.  Let the bugz puke as long and hard as they need to.

The important thing for the macro however, will be to see if the stuff touted as the collective ‘Trump Trade’ continues to wane and negatively diverge the stock market, which did after all hit and exceed my Dow 21,000 and for all intents and purposes hit SPX 2410 (2400.98).

It is no secret that I think the guy running the White House may well be a sociopath.  It is also no secret that the market has not experienced a terminal volume event.  So this little nick it’s getting now may just be a healthy correction.  Or as noted the other day in this amateur’s cycles post

What we seem to have by the 12 mo. cycle is a top of some kind due now, but the 30 mo. is not due for another 6 months.  That seems to jibe well with the idea that we have not yet had a volume blow off (i.e. a climactic volume and bullish capitulation event) and that the real top may be out on the horizon.  6 months also happens to coincide with the often problematic month of September.

Sound like a plan?  Well yeah, the ultimate top could be out in September/October, but the cycles make no guarantee about the identity of a turning point (top or bottom), so that could also be a date for a low in the market as well.  Therefore, the blanks will have to be filled in along the way using the more artful stuff.

But it is notable that the precious metals have led commodities, which may lead the broad markets into… something.  I’d dearly love to be able to chart improving sector fundamentals for the gold miners.  Gold-Oil is a start and if the Trump Trades continue to weaken we may really start making some progress.  The next step for the broad stock market is confirming a favored scenario that the current disturbance will not be terminal, but rather just a correction of all the post-election asset market silliness.

Day to day we go in this dynamic, confusing and infinitely interesting market, with no preconceived (i.e. cement headed) bias *.  Still long several stocks, mildly long only the best quality miners, long TLT and short the S&P 500 and Emerging Markets.

I am rambling now.  It’s not a post of formal analysis.  Just some end of day thoughts.  The thing I am longest of is CASH.  My head is full of ideas and the market is going to continue to define which ideas are the right ones.  Meanwhile, I see certain unnamed (and well known) geniuses touting commodities and inflation and I just shake my head as I did when a well known promoter was waxing on a couple of weeks ago about how bullish gold stocks were because of… inflation.

Sorry for the uneven, rambling post.  I love this stuff but sometimes I don’t have the time or energy to make things sound overly smooth on the public site.  The environment is, shall we say, fluid.

* When you feel about the supposed leader of the free world as I do, keeping the bias out of it has been easier than I would have thought.

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