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Notes From the Rabbit Hole
Notes From the Rabbit Hole, #761


US Stock Market: In favored target zone of 4219 to 4300 SPX as led by NDX and SOX. In other words, we’re on the plan we’ve been on for the whole bear market rally. It’s an apt time for a pullback/correction, but the segment below shows 4 options.

US Market Sentiment: Over-bullish, contrary negative.

US Market Indicators: Currently benign, see PM segment, where for gold these same indicators are not constructive.

Global Stock Markets: It’s mainly bullish out there as Japan screams higher (weak Yen) and Europe and India remain aloft. Commodity/resources countries Canada and Australia are more suspect. The EM index has broken a trend line to put on a somewhat bullish look. China large caps (FXI) are, by the way, at a critical juncture, having bounced to the convergence of the downtrending 50 and 200 day moving averages. It looks similar to copper, and that is not a coincidence.

Precious Metals: The correction grinds on and it is healthy. Patience required, as it was easy to project a drop – for example – in GDX to sub-28, but quite another thing to manage its interim ups and downs. See segment for updated technicals on the metals and miners.

Commodities: No changes here. The complex as a whole (CRB) continues to trend down, as does Crude Oil. There are individual areas of interest and for me, the primary one is Uranium. Platinum is also constructive as it pulls back within an intermediate uptrend (pullback projection noted in the segment below).

Currencies: As USD decides between short-term bull or bear – and IMO the short-term is unclear – the larger view continues to be of a long-term bull market for the reserve currency. Again, see segment for the details, including the potential that Bitcoin has bottomed and in its current pullback may be providing an opportunity for BTC bulls.

US Stock Market

We have arrived. At 4299, SPX is at the upper end of the primary target, which was 4219 (gap fill) to 4300 (resistance and a lower high to August, 2022’s high of 4325.28), with the August high representing a gateway through which SPX could target 4800 (+/-) if a real MOMO (momentum) driven FOMO (fear of missing out) event is in the offing.

Slowly but surely, the larger financial media and the Twitter sound bite machine are coming around to the new bull market theme. Despite all of the negatives facing stocks the market just keeps brushing them off and heading higher. A bull climbing a wall of worry, some would say.

Well, this was always going to be part of a proper FOMO event!

I found this amusing, and telling. From what I have seen Julia is a pure trader, and a pretty good one at that. I saw these tweets and decided to check out the critical fellow and sure enough, he’s full bull, with a series of tweets cheering the stock market, as if he’s being contrarian and the bears are going to get killed. But Julia is a trader, and that means she is bullish or bearish and it matters not what the backdrop is. She’s going to trade it.

The point is, when the MOMOs and FOMOs hit the scene they are going to defend their positions as if this is a war (in this case against the evil shorts and bears). It’s sort of like gold bugs standing up a straw man (e.g. the evil “bankster” cabal) for the follower bugs to get mad at when gold’s price drops, rather than admitting the fact that gold goes through cycles like all other assets, and price-wise at least, is not ‘perma’ bullish.

As for the media, slowly it turns from having tended the herds bearish for too long to now showing a few signs of ‘happy days are here again!’ mentality. Remember, the mainstream media is there to reinforce what the herd already thinks. That is how it gets paid; it harvests willing eyeballs. Still, the bull is not nearly pervasive in the mainstream financial media as its figurehead, Jim Cramer did make some noise about Tech ripping the shorts’ heads off recently but also, there’s this…

It’s not a pleasant headline if you’re short-term bearish and value contrary indicators.

Anyway, we are in a process of flipping the sentiment structures to over-bullish as the Fed prepares to either pause/halt or make its final rate hike. And oh, baby, look at that dumb money eat the market! Look at smart money indicators fade it. We’re in process alright, and risk is elevated on both the short and medium-term according to Sentimentrader’s amalgamated signals.

Complacency is pervasive as the benign market ole’ contrarian Jim above notes has been calm and is giving little reason for participants to be upset. The market is bullish, yes. But on a risk/reward basis it is very high risk.

Yet, check out our Equity Put/Call ratio’s pressure gauge. The bulls have broken the bear by this indicator, and the reality is that on most occasions when CPCE’s 10 week exponential moving average has made a hard initial breakdown like this, there was a substantial period of rising stock prices that followed.

Different this time? It is very possible, in a market (and macro) that has had its signals in a blender since 2020. But this could also indicate that pure momentum could be gathering that could actually bring SPX to the seemingly improbable target of 4800 (while the likes of Tech and Semi make new highs). I took a short on SPX on Friday, so I do not particularly enjoy writing this, but will report what I see rather than what I want to see.

Somewhat humorously, NAAIM fancies itself as a view into what active “risk” managers are doing at any given time. From NAAIM:

It is important to recognize that the NAAIM Exposure Index is not predictive in nature and is of little value in attempting to determine what the stock market will do in the future. The primary goal of most active managers is to manage the risk/reward relationship of the stock market and to stay in tune with what the market is doing at any given time. As the name indicates, the NAAIM Exposure Index provides insight into the actual adjustments active risk managers have made to client accounts over the past two weeks.

Well, okay, but I don’t call aping the market’s every move to be good risk management. The market was at extremely low risk for the multiple reasons we repeatedly stated back in Q4, 2022. These “risk” managers were in full retreat. Last week in NFTRH 760:

NAAIM (investment managers): Quite subdued on May 31, but so too was the S&P 500. NAAIM are likely to have rediscovered their vigor by week’s end, along with SPX.

Well? NAAIM are a contrary bearish signal.

This tweet showed the most recent reading on Newsletter sentiment as of June 6.

The US stock market is bullish and it is also OVER bullish, by its sentiment indicators. Sentiment is not a good timer and if there is a real FOMO/MOMO event in the offing it could still turn into an epic suck-in at higher levels. But risk/reward sucks right now. That would be the case no matter how high stock prices may climb without a correction to clear the sentiment backdrop.

Here is our bullish specimen, lagging its leaders (Tech & Semi) within the primary target zone. SPX halted right at the August high. What the bulls have going for them, aside from an intermediate uptrend, is that the situation is not particularly overbought. SPX being an amalgam of various sectors, this could imply rotation to come within the market’s internals (perhaps back toward cyclical, value, etc.). But as a whole, it could indicate that if the market does correct from this area, it could have more upside after the correction. The reason being that most FOMO/MOMO events end in upside extremes in sentiment and overbought technical readings.

But given the state of the Equity Put/Call ratio and intact bull mentality, the other option could be that the pig just keeps on going from here, into termination later in the year. Of course, it could just roll over now of its own bloat if the “bear market rally” view is correct. In order of my personal view of the probabilities:

  1. Correction now, but not necessarily THE terminal one just yet. That story would be told by the 3808 marker at the March low, as a lower low there would break the rally.
  2. Continuation now, and onward to a real blow off market top amid much FOMO’ing MOMO.
  3. Correction now, and failure back into the bear market (I am just not convinced we’ve had enough bullish ‘suck-in’ sentiment just yet).
  4. It’s a new bull market, which began in Q4, 2022.

Global Stock Markets

Please take due note that local currencies play a role in market performance for global citizens. NFTRH being American, cannot get too far afield managing all those moving parts with my simple charts. So global market comments and charts are for reference.

Global stocks (on balance) continue to try to convince us that either the US dollar is going to weaken again or that the inverse relationship between Uncle Buck and global equities (on balance) will be severed to some degree. With a bump up in US unemployment claims, the ongoing recession in US (and global) manufacturing and inflation readings continuing to moderate, the play could well be a projection of a weakening of the heretofore hawkish Fed (which could also be a stimulant to option #2 directly above). Or, as has happened with other short-term disconnects the relationship could slam back into being at any time.

Here is the weekly chart view of some markets.

The World (ex-US) is as we left it when we last viewed these charts several weeks ago (as are most of the markets below). ACWX is above very important support at 45-46. Europe as a whole is following Germany, the leader, upward in stair-step fashion.

I saw a poor economic headline about Great Britain recently, and there is the suspect/neutral stock market reflecting that after making a lower high. File the commodity countries Canada and Australia in that suspect/neutral category as well.

Japan has busted on its bullish way after having been constructive for so many months. Long-term subscribers may recall the upside target based on the longer-term (monthly chart) base breakout is around 35000 for Nikkei. At 32265 that’s not a heck of a lot of upside from here.

Last time we reviewed these charts we noted Hong Kong in a trendline breakout and Emerging Markets thinking about it. Well, EM made its move last week. I am not a big advocate of trend lines having undue meaning, but it’s sure not bearish as long as it holds up. India is flying around near blue sky and is bullish. No target, just bullish (by definition).

Finally, Canada’s TSX-V still slithers along the floor and very important long-term support. Hold it and turn up and we’re probably on a heck of an inflation trade. Fail and drop and quite the contrary. But man, can you please stop the slithering routine? Do something!

Brazil is well above important support and biased bullish. Argentina’s bubble is alive and well as the miracle of currency devaluation pumps said bubble.

Mexico is and has been just plain bullish since Q4, 2022. Africa, a land of so much future hope, does not have a chart that seems to think so. The Frontier Markets ETF has continued to hold support.

Precious Metals

Here is how the week ended for our daily macro fundamentals chart measuring gold vs. cyclical and more inflation sensitive items. With respect to the US markets segment above, the gold mining sector’s best fundamental backdrop would like to see either stock market option #1 (correction now, not necessarily terminal) or option #3 (correction and resumption of the bear market) take place. What it most definitely does not want to see is option #4 (new bull market), which would most likely send gold stocks back to the hell they came from.

Here let’s also note that the miners do not always go in the direction of their best fundamentals. Ref. the crash of 2008 on the downside and 2003-2008 (300%+) on the upside, for examples. But for a solid ongoing bullish fundamental view we want to see Gold/SPX hold above the February low. Gold/Global is less bullish and has not definitively turned yet, so more floundering there is acceptable, I suppose.

Gold is trending up vs. commodities, including important mining cost input crude oil. It is taking a normal pullback vs. the star cyclical bull commodity, copper. This coming amid the relief that is fanning out across broader financial markets. Again, normal at this time.

Gold (daily) is as we left it last, below short-term resistance and the SMA 50 and technically vulnerable within its intact uptrend from Q4, 2022. Take out the SMA 50 and we can talk bull. But for now, it’s below and has technical downside risk with RSI and MACD negative.

The monthly chart situation is unchanged. I’ve seen some stuff out there about a dreaded triple top in gold. But what it actually is is blue sky resistance that has now been banged away at 3 times. Usually, the more times a stock or market bangs at resistance, the weaker that resistance becomes. In other words, gold wants blue sky sooner or later. RSI is positive and MACD is positive and triggered.

Yet, this is who we are dealing with, the ‘buy gold for any season and any reason!’ crowd that wants to promote the metal at all times. That is where the inflation touts come in and they were wrong every step of the way. The worst of the inflation hysteria blew out by Q4, 2022 and wouldn’t you know, gold then bottomed. Tune out the masses, including the masses of supposed gold experts. I am no gold expert by the way. I am just a guy who likes to adhere to reality. An all too rare notion these days, I grant you.

I probably introduced too much noise for you with this update last week identifying a little Inverted H&S on SLV. Its premise was that silver could bust through the SMA 50 (and associated resistance) to fill SLV’s gap equivalent to the 25.60 area on silver. In support of that is a positive RSI and an up-triggered MACD. In defiance of that is the SMA 50 and clear resistance. It’s worth watching, however, because if it should happen, well, silver is so often the sector leader. For now, the SMA 50’s underside and resistance hold sway and are the keys.

GDX (daily) is two things, pleasant and unpleasant. Thing 1 is because it’s in an intermediate uptrend from Q4, 2022 and would be so even with a drop to the preferred sub-28 gap fill. It would remain pleasant as long as it holds a higher low to the March low (26.58). That would be a pleasant buying opportunity.

It is unpleasant in its look within the intermediate uptrend, however. As with silver, the SMA 50 (33.22) coincides with clear resistance. To my eye, it looks unfinished with respect to the correction. If GDX takes out the SMA 50 I’d probably have to eat those words. Short of that, we’re looking for the upturned SMA 200 (28.85) and potentially a quick spike below it.

Other Factors

  • Gold and silver Commitments of Traders were still far from a contrary ‘buy’ level as of June 6.
  • Gold/global currencies continue to ease within ongoing uptrends.
  • Real 10yr Treasury yields are once again elevated and bearish for gold. I don’t expect that to last long, but for now we have to call what we see.
  • 10yr-2yr Yield Curve continues to re-flatten, which is constructive for Goldilocks, but not for gold.
  • The Libor/T-bill indicator bounced a bit, indicating a little twitch in macro risk, but is still very tame, macro constructive and thus, gold as a safe haven is not on radar for casino patrons.
  • Money supply continues to roll over and that will eventually be positive for gold because its safe haven aspects will be sought if the draining supply of (funny) munny results in a resumed bear market as expected. If the Fed then flips dovish, the dollar will have little underpinning it… except for a ‘market liquidation bid’ if that should come about. In other words, that’s the type of situation during which the remaining inflation bugs could make a final puke, providing a clear buying opportunity. It’s happened before, it could happen again.
  • High Yield spreads are burrowing southward at this time and that indicates risk ‘on’, macro okay (for now) and little motivation by the herds to seek the insurance known as gold.

The issue with the indications above is that they could change in a nanosecond. It’s not like we are going to be able to manage a nice, gentle trend into a bear market or liquidation. If those come about they will likely come about with a clear EXCLAMATION point! A day that just feels like ‘it’, the top signal. This could include an upside blow off and reversal, much like silver did on May 2nd, 2011 to end its bull market. So let’s remember not to be too robotic in a high risk (broad) market. Let’s check the indicator gauges along the way and have perspective and so much patience. That’s what this is in today’s broad macro, a patience play.

Speaking of perspective and patience, let’s end the segment with weekly and monthly views of HUI. Weekly HUI found support at an area that shows several clear historical touch points (240). That could hold as support, but considering the GDX daily chart above and weekly HUI’s now negative RSI and down triggered MACD, the 220 to 225 area looks doable.

The monthly chart slows everything down and advises a likely bottom back in Q4, 2022 and a grinding rally still in play. Huey will need to clear the 310-320 area to call the correction from the 2020 high over, however. Regardless, as long as the rally from Q4, 2022 remains intact we are looking for this to eventually morph into the next leg up and an eventual target of 500 (+/-). Did somebody say “patience”?


  • CRB Index: No change, still firmly trending down.
  • Crude Oil: See above, downtrend intact, OPEC+ clowned.
  • Natural Gas: Post crash, trying to establish a base. Not technically actionable yet from bull side.
  • Copper/Industrial Metals (GYX): Oversold bounce in progress. Copper is at an important juncture at the underside of the converging 50 and 200 day moving averages. Take those out and the correction could be over. Don’t take them out or take them and fail, and the bear resumes.
  • Lithium, Nickel, REE, Palladium & Platinum: Li price is still in bounce mode after finding support. Profit taken on LTHM. Nickel price ticked a new post-2022 low in the last couple of weeks, which is why I turned away from the buy button on TLO.TO (TLOFF). Profit taken on Rare Earth Materials producer MP, as it bounced within its downtrend. MP is the strategic US based Rare Earths producer in a space dominated by China. Pd made a new low on Friday and is technically quite bearish. Pt continues to correct within an intact uptrend that began in September, 2022. If you are a fundamental Pt bull (current price: 1013) and want to buy the uptrend, a pullback to the SMA 200 (988) to support at 960 would be optimal.
  • Uranium: The sector, and especially its leader, CCJ, held the bullish break last week, with URNM holding above the daily SMA 200, using it as a support test for 6 days in a row now. A chart of CCJ is included in the June 2nd Trade Log, showing a breakout from a symmetrical triangle (continuation) pattern. CCJ is in a bullish technical posture and I held on to it for that reason (and for a L/T bullish view of u3o8 in general). If this notoriously volatile sector fails I’ll probably sell CCJ. But as with items like MP above, I want to be positioned when the real move comes. u3o8 price tracker SRUUF remains neutral with a bullish bias.
  • Agricultural Commodities (GKX): The index continues to look quite bearish, yet the ETF (DBA) continues to look constructive to have based and bottomed. I have not had the time or inclination to study why there is a disconnect, but if you are interested in the Ags, you might wish to look into it. As a side note, I am keeping an eye on related ‘ferts’ NTR and MOS, two stocks you may recall were my favored way to play the sector. Like many other commodity related equities, they’ve been bombed out and should provide opportunity for a trade or investment out ahead.

For now, however, commodities as a whole are of little interest because they are the building materials and bedrock of a physical economy (as opposed to the AI-driven one Wall Street is trying to hang its hat on now). With manufacturing decelerating markedly and the economy slowly losing more of its underpinnings, and just as importantly, with the acute post-2020 inflation phase over, commodities are not favored. Not yet. They would be a vehicle for when we start projecting the next inflationary situation one day. Uranium is my pet wildcard, however.


USD (daily) is sitting at a support area just above the SMA 50. If it holds at its current lower high to the March high it will remain in an intermediate downtrend and as the SMA 200 starts to slope down, an oncoming major downtrend. With gold weak relative to silver, the indication is market positive, USD negative for now. But here let’s remember how some indications simply turn when they are ready, without technical warning. In other words, if a broad market liquidation comes about these two could ramp big time.

The problem for the DoD (Death of the Dollar cult) is that weekly USD did not lose the neckline of the would-be Head & Shoulders pattern. If it makes a higher high to the March high of 105.87 (taking out the SMA 200 above at 105.47 in the process) then clear the tracks because the 2 Horsemen of the macro Apocalypse could yet ride again to bring liquidation punishment to today’s FOMOs and MOMOs. Hold below that March high and the prospect of further correction for USD would remain in play. I am going to give you parameters to work with, rather than try to predict what I don’t know.

One thing I do know is that USD remains in a long-term bull market by definition of its trend from 2008. “De-dollarize this!” says this bullish chart. Where the analysis is unclear is in the interim potential for a decline to or toward the 92.50 area, which could launch a whole lot of bull in many US sectors, global stocks and commodities (not to mention gold and silver) if it were to come about. A drop below a 100 and the neckline above would trigger that. But here’s the thing, USD is above all support levels on this monthly chart. So, patience, perspective.

The daily global currencies chart shows gold’s closest currency companion, the Swiss Franc, consolidating with an intact uptrend, JPY trying to bounce a bit within an intact downtrend, EUR barely holding on to an uptrend and commodity currencies CAD and AUD neutral bullish bias and bouncing within a downtrend, respectively. British Pound seems to be getting some liquidity as the British economy sputters and its market flounders.

Finally, for you crypto enthusiasts, BTCUSD (daily) continues to correct after hitting the upside bounce target of 30000+. The question now is ‘has it bottomed?’. Our original downside buy projection was 10500 to 12000 or so. But the daily view says that could change if BTC holds support at the daily SMA 200 (23550 and rising). As noted for Palladium above, if you are bullish for fundamental reasons that would be a technical area to give it a shot.


Savings balanced by gold.

Trading Account: Short XME (Metals & Mining)

Roth IRA (non-taxable, no contributions)

Cash is 83%, but that includes two short positions. The IRA continues to pick up its nickels (trades before an expected eventual resumption of the 2022 bear), hedge as needed and short here or there. I watch it closely because we are managing a time of change, not a time of robo trends. That includes the potential of an upside blow off at SPX 4800. It’s all temporary to me. But temporary is now measured in months (7 months now since the Q4, 2022 rally was projected), but hopefully not years.

Cash & income-paying Equivalents are at levels that are right for me and my real-world situation. Your situation is different. Cash will be adjusted as needed.

Refer to the Trade Log under the NFTRH Premium menu at for trade info, if interested (not that you necessarily should be). Also, you can follow at Twitter @NFTRHgt for notice of updates.

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Notes From the Rabbit Hole (NFTRH) is a weekly market report in which we provide analysis on financial markets.  We make every effort to provide accurate and high quality content, but this analysis ultimately represents our opinions and these opinions are provided without warranty or guarantee of any kind.  See full terms & conditions of service under the ‘About’ heading in the main menu.