NFTRH; Mid-Week Status of US Stocks, TLT, CRB & HUI

Folks, I have been going down a slippery slope to what now seems like a full-on flu since Sunday.  So while I am semi-functional, I wanted to get some charts and comments out sooner rather than later.

While leaders like NDX and SOX are near their highs, most indexes have not taken back a bullish stance, including SPX below.  In other words, though we noted risk in stocks to be lower in yesterday’s update, today’s rally did not break the market out of its fledgling downtrend channel.  The areas to watch are the EMAs 10 & 20 (as usual) and the top channel line.


Small Caps are even more suspect with RUT below the SMA 50 and though I’ve not drawn it, in a down channel of its own.  Bulls start to get serious if they take the SMA 50 and bears might want to get out of the way if it breaks above 1394.  I covered some of the shorts here but added some back on today’s close.  At this point I would like to make clear also that I am still in ‘balance’ mode, not bearish mode, even if the correction resumes.  I took a profit on KBH but added back IBM (yes, again), which fits the bill for the current portfolio management mode.


TLT turned down on today’s risk ‘on’ animal spirits.  I took the hard-earned profit on it in the IRA and also dumped the TMV position that was guarding its price.  So on a balance a price profit and dividends.  Still holding both items in the brokerage but did take a small profit on LQD.  Much like gold, TLT would want risk to go ‘off’ again.  If it does and TLT breaks out, I’d like to buy more.  But if it is going to go bearish, today’s high is the point it would do it.


CRB index is making a pretense toward the anticipated bounce.  Looking at perhaps 188/189.


HUI hit the key 195 ‘neckline’ parameter (not drawn in on this chart) today after dropping back below the SMA 50.  We noted the gathering caution yesterday and the hit came today as market bulls’ endorphins got released.  While I lean a bit to a short-term bearish scenario I note to you that it has seemed most public gold bug writers have been anticipating a pullback.  It makes me uncomfortable if I am a bear and while I pared back my already modest positions after yesterday’s cautionary update, I am not feeling particularly bearish.  I took puts on silver today (as noted in a public post) but that is casino gambling.  If risk goes off again in the broad market, gold and the miners could be pressured but that would likely be a buying opportunity in quality miners (my list would include adding to, KLDX and SSRI, each of which I trimmed this week).  Alternatively, be at least mentally prepared for the sector to fool everyone by not going bearish, as it is counter-cyclical after all.  It may bounce tomorrow but the 1st key is to hold a break above the SMA 50.


Unless my head falls off I will probably be around, even posting a little.  But I am dizzy enough now and realize that my thinking cap is not on straight.  Hopefully later in the week I’ll get back to normal.

Bottom line of what I see today is…

  1. Stock market bouncing and forcing short covering, but still a candidate to put in a better correction, which could bring new highs later on if we get a good sentiment clean out.  If it resumes bullish now, so be it.  It’s still a bull trend after all and the market does not care about our 2410 target.
  2. TLT would still be a portfolio balancing tool and dividend payer, but as noted in the weekend report, the compelling contrary aspect of that trade appears over.  If it continues upward I’ll get rid of the TMV bear position.
  3. Commodities are bouncing, and I did buy the Energy sector on yesterday’s drop in consideration of the analysis in NFTRH 440.  We’ll see how that goes.  Sometimes you’ve got to take a shot I think.
  4. The gold sector appears set up to shake out some gold bugs once again but anecdotally I have not seen chest thumping among them.  What I have seen is cool handed market managers guiding their readers into news lows.  This alone makes me suspect of the short-term bear case, though I favor it still due to the miners/metals divergence.  Remember, with respect to HUI (and most items in the sector) Thing 1 is the SMA 50 (blue) and Thing 2 is the SMA 200 (red) and a higher high to February.  Thing 2 is the short-term gateway to a bull market in the miners.  Either way, the big picture is good unless HUI loses the monthly chart’s mid-Bollinger point, currently at 180, on a monthly close.  So on the big picture HUI looks technically bullish and a pullback, if it occurs would be a buying opportunity.  Indeed, as long as that parameter holds it looks like all significant drops have been opportunities for those true believers building positions.  This chart alone makes me not want to be too cute about being lightly positioned.   Okay, let me come out with it… I feel bullish (especially if the stock market resumes it correction) as a buyer unless risk goes and stays ‘on’ in the broad markets.  Then I’d be bullish that spectacle, because that is what the market would instruct.