NFTRH+; Update [w/ edit]

[edit] I wanted to mention that there are still many charts with intact trends. Personally, if something loses trend I have probably sold it and if something is not favored or looks vulnerable for technical or fundamentals reasons I have sold it if it is not core. But using LAC & MP as examples of two stocks I have held to this point, they have dropped to test their major (SMA 200 uptrends) and that is an example of how I am viewing this broad correction, generally. They are stocks I like that have dropped to extreme ‘buy’ levels (assuming the macro does not literally fall apart), so why would I sell them here?

With the caveat that as my vacation goes on (back in my office on Wed.) I am further removed from the specifics of the market situation that seems timed perfectly with my first vacation in years. Oh how I want to be in my regular seat at this time. Until today I managed to squeeze in a nice vacation with the Mrs. :-)

Let’s bullet point a few thoughts as per the previous update.

  • Gold is back below the 1920 bull gateway. It is still in ‘handle breakout’ mode so the big picture is intact, but the short-term overbought is being addressed in the metal and miners. It’s not pleasant but it’s part of the process.
  • With gold under performing commodities and not yet confirmed vs. stocks the macro was simply not right yet, and that was our main caveat (along w/ secondary seasonal & CoT) to other considerations that were turning bullish.
  • But as noted previously gold and gold stocks often go down when the cyclical macro takes a hit. As strange as it seems, this is usually the way it goes. When the inflated macro gets wrecked or impaired – as the Fed is trying to make happen now because it’s the only tool they have to try to stop the inflation they created – the precious metals are often part of the wreckage but also first to recover.
  • It’s why we remain aware of inflation-centric gold bugs and their habit of buying because oil, base metals, Ags and other cyclical commodities are going up.
  • As a benefit to what is happening now, Treasury bonds are getting bid today. That is what the Fed wants as it guides money out of inflated asset markets. In microcosm, this is dis-inflationary and it is the beginning what we’d want for a counter-cyclical or ‘Goldilocks’ view. The former would eventually favor gold stocks and the latter would eventually favor less cyclical Tech and growth items.
  • Of course a severe bear market is always a possible. That would eventually favor gold heavily, as the Fed flips back to dove mode somewhere down the line.
  • But the fact that gold and especially gold stocks rose in line with inflation trades was a concern and now that concern is realized. Happens every time and personally, I wish I’d have a bit more resolve about the fact that it is never ‘different this time’. Inflation bugs sell when they start selling the inflation trades.
  • On the plus side, if this market correction morphs into a genuine bear phase it’ll be time to be thinking like a predator, waiting to take advantage of the panicking inflation bugs, shorting stocks on setups (I’d default to just sit on T-bills and cash) and having a lot of patience.
  • Importantly, as the herds rush into the liquidity of US dollars (on cue) we might watch Uncle Buck for signs of NEGATIVE divergence to the would-be liquidity crisis as we recall how a bullish USD diverged the inflation trades for most of 2021 into 2022.


This Post Has One Comment

  1. Dyrl

    The old joke………….if you want a stock to go down, buy it. If you want a stock to go up, sell it.
    I put all my miners on a tight stop-leash which means that they will all be sold this week, which means a massive reversal.
    You can all thank me later………….Dyrl

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