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Summary

US Stock Market: Still on last week’s theme of a potential new upside surge. But there are some short-term developments that could see some dropping and back-filling. Longer-term, the view is bearish. See segment’s video.

US Market Sentiment: Structurally over-bullish, and last week Dumb money surged while Smart money indicators continued fading. Unhealthy contrarian sentiment, but on balance not hideously extreme.

Global Stock Markets [last week]: Still generally trending down vs. US market, as the headwind USD is still in breakout mode. If USD fails its support test (see below), Global can play some catch-up. Keeping an eye on China/Asia/EM, and Canada’s TSX-V in that regard. This week: Segment adds some color to what it would take to favor global over US.

Precious Metals: Gold technically targets 3000+ after the breakout of the Symmetrical Triangle and resistance. Silver is on the verge of targeting 42 after holding the SMA 50 and 200, and the wedge/handle/flat breakout. Miners are intact to a resumed rally theme, tentatively so. See segment’s video.

Commodities [last week]: Commodities popped and flagged. Still awaiting USD breakdown or support hold for green or yellow/red light. Let’s keep an eye on the Canadian TSX-V, which is postured to break out. Postured is not broken out, but if USD drops and the ‘V’ pops it’ll be looking good. This week: the ‘V’ popped above resistance, but USD has not dropped. Nor has the Gold/Silver ratio. So for now it’s Whack-a-mole style, where commodities routinely pop and drop. See segment for details of commodity sub-segments.

Bonds: Long-term Treasury yields popped on Friday, but remain within very short-term downtrends. But the dominant trends are up, so yields will have to continue to decline in order to think about changing the bond view to bullish. Short-term Treasury bonds are a different story and IMO are best for a steepening yield curve situation.

US Dollar Index: USD remains plucky in its base breakout. Hence, a level of caution continues to be advised, especially since the Gold/Silver ratio also remains perched in a constructive situation.

Indicators:

• Gold/Silver ratio and USD continue to sit there, in constructive fashion. That is an internal yellow flag for many markets, especially inflation markets, as long as it persists.
• Yield curves are clearly steepening and should resolve badly for markets in time. Steepening yield curves usually see the economic “bust” end of the boom/bust continuum.
• Fed liquidity draining, while stonks continue upward. Bad combination…
• …unless somehow the fiscal side (Trump/government) manage to shove enough stimulus through. That job would clearly be more difficult if Treasury yields remain highly elevated.
• A dangerous correlation to 2007 remains in play in the bond market, as inflation jitters pressure the Fed to not go further dovish. A similar dynamic occurred in 2007 prior to Armageddon ’08, or what the media called the “Great Recession”.
• Fed monetary indicators see the Fed remaining tight. But this is only one aspect of policy-making. The other is fiscal and folks, I am not trying to keep up with Trump, Musk and company. They are in the fiscal workings like nothing I’ve ever seen before. Hence, I have to be careful about guessing the outcomes, and also about letting my bias about their actions interfere. But for now, we should assume its Fed tight, Government loosey goosey.
• VIX: asleep. High Yield spreads: asleep. Other non-forward looking indicators: asleep. One day, it’ll be “wakey wakey little indicators”… but not today. Not yet.

US Stock Market

I’d like to try something a little different this week. It is easier to include more information about more indexes/ETFs by simply dialing them up and talking about them. If you have a mind to, I’d appreciate feedback on this format vs. the normal static written format. Note: in the video I stated that I had sold out of the Energy sector. But in fact, CVX is still held at this time.

US Stock Market Sentiment

Risk is elevated to high in stocks, Dumb money indicators are eating the stock market and Smart money is distributing. This goes with the high levels of net insider selling we have viewed previously. Gold remains very high risk, by ST’s measures. However, there ain’t no fever like gold fever. Over-bullish readings could ride all the way to our 3000+ target. It’s just something to be aware of.

In the least surprising news of the week NAAIM (investment managers) allowed Monday’s DeepSeek-instigated decline to scare them out of their over-bullish stance, tanking them from 86% to 64% to 68% as of the 29th.

Investors Intelligence (newsletters) remained in tank mode as of January 28th. A bull/bear ratio of 1.61, down from near 4. A contrary positive as of that date.

AAII (individual investors) knee-jerked from a bull/bear ratio of .6 to 1.5 before settling at 1.2 as of January 30th. Moderate contrary negative.

Sentiment continues to be structurally over-bullish while popping up and down with the market’s surges and pullbacks. Quick tank jobs like the China DeekSeek news tend to refresh the bull short-term. It’s why we don’t want to knee-jerk bearish on stocks on any given inflammatory news event.

Market Indicators

Please see the Summary segment above for an ongoing wrap up of most of the internal indications. I’ll just pop a few items of interest in here on occasion. Most recently, yield curves and gold ratios were analyzed on Friday:

Gold Ratios Progressing, Gold Miners to Benefit

The picture, by both yield curves and gold’s ratios to cyclical, risk-on and more inflation-sensitive markets is one slowly sinking toward a counter-cyclical economic backdrop. A polite way of saying “bust” or “recession”.

This is what the indicators say. I get that many people are hopped up on Trump’s supposed pro-business policies, but I also get that a big contrarian opportunity could be brewing. Not “IS” brewing, but logically could be (and probably is), based on the market’s internal indications.

We have in the past noted that the Canadian pair, the TSX-V/TSX ratio, has tended to positively correlate with inflation signals over time. As you can see, the ‘V’ and its ratio to TSX exploded upward out of the Q1, 2020 inflationary operations by central banks and governments. They declined together as central banks finally and tardily got on the hawk; and now they are diverging.

As you know, we have first noted a potentially bullish pattern in TSX-V and then its breakout:

If the breakout holds our upside target is resistance at 680. A pretty decent trade. However, with reference to the first chart above such a trade will likely not come at the hands of a renewed inflation problem, as long as TSX-V/TSX remains purely in a downtrend.

Since the worst of the post-2020 inflation problem came with inflation markets cowering to the newly hawkish Fed it stands to reason that the TSX-V is relatively firm on this cycle due to the opposite of inflation. It is reasonable to believe it is rallying on Fed and central bank relief. If it were rallying on fiscal (government) inflationary policies to come, you would think that the TSX-V/TSX ratio would also be rising.

Regardless, I find it interesting that a disinflationary signal is still firmly in place. Our view has been Inflation > Disinflation > Deflation scare and the dynamic between the two Canadian stock markets seems to agree.

Want more backing for that view? The strong USD (weak inverse USD) has gone hand in hand with the TSX-V/TSX ratio since the Bernanke mega bailout era, from 2008 to today.

Meanwhile, the USD and Gold/Silver ratio pair have not made a short-term decision to fail. Nominal TSX-V seems to think they will, but the trend in TSX-V/TSX and the daily charts of USD and GSR themselves all may beg to differ as USD sits atop the key base breakout point, and…

…the GSR continues to perch above the 50 day average in a constructive looking pattern.

Bottom Line

If USD and GSR remain firm but do not get impulsive to the upside, at best a TSX-V breakout (currently one day old and subject to whipsaw) would indicate “trade only”, perhaps to our target of 680. At worst, a whipsaw/bull trap failure but perhaps nothing too damaging.

If USD and GSR fail, it’s party time and a firm view of TSX-V 680, if not something bigger.

However, USD and GSR are at this time still firm and poised with a bullish bias. If this remains the case it will be best to maybe speculate as you will, but tune out the pom pom wavers, many of whom have express interest in luring in new promotional marks.

Precious Metals

Well heck, let’s try the video format here as we did in the US Stock Market segment. This really allows me to get more done in less time. Feedback appreciated.

Precious Metals Sector Internals & Indications

In the Market Indicators segment above a public article showing yield curves and gold ratios was linked. Both of these are important considerations and currently bull trending internals for the gold stock sector and the precious metals in general.

To this let’s add the view of gold vs. the inflation expectations gauge, RINF. HUI is rising in unison with its macro-fundamental underpinning. But notice that HUI is much lower than its October high, whereas Gold/RINF has ticked above it. In other words, there is still a divergence in play. Nothing spectacular, but it is positive. Gold stocks are NOT about inflation. Don’t let ’em promote you otherwise.

The HUI/Gold ratio is still only in bounce mode, so no big signal yet. But a low could be in place. For reference, the February low and bounce did not change its trend until May. By then a good chunk of the rally was already in the books.

HUI/SPX ratio looks like it may have made a sneaky bottom. Follow-through needed.

The Gold Miners Bullish Percent index aborted its decline above the preferred 30 area, but in a bull market, and barring a big broad market decline, that may have been as good as it gets for bears and bottom feeders. I am not sure what the negative RSI divergence is trying to tell us, but it could be asking for an awareness of short-term pullback potential.

Finally, a big picture macro view of gold vs. the sexiest “money” asset, Bitcoin, is in the dumps. Bitcoin bulls tout this as affirmation of their view of real money and a USD alternative. I see it as simply the mark of a still intact broad market speculative atmosphere. I could just be an old fart not up with the times. But my bet is that when the macro turns for the worse, this ratio will turn for the better. To me it is the ratio of monetary value vs. monetary speculation.

Commodities

• CRB, GNX, DBC: CRB continues to be in base breakout mode, above the May high. Positive. GNX and DBC, however, continue to sit well below their May highs. So again, we reference “Commodity Whack-a-Mole”, a phenomenon where despite a less than stellar macro, various commodities pop and drop. The disparity here is obviously in CRB being weighted with more poppers than droppers, relative to the other two.
• Copper/Industrial Metals: Copper’s daily chart sits neutral, but to my eye with a positive bias to it. GYX continues to be a slightly less positive version of Copper. Copper miners were weak again last week and they are sitting heavy upon very important long-term support. Either a great buy or a prep for a major failure. Again, watch USD and its partner, the Gold/Silver ratio, because the copper/metals complex is likely to go the opposite way of those two.
• Energy: Crude Oil (WTI) is still trending mildly down, but in pulling back hard from its most recent high (which did slightly tick a higher high, something to be watched), it is currently testing its SMA 50 at 71.57 with an important support zone at 70-71. In other words, if oil is to break its downtrend, this would be looked back at as a buying opportunity. NatGas has dropped hard from 4.30 to 3. It is testing a support zone now, in the 2.80 to 3 area.
• Uranium: Sector still trying to grind out a low. Big volatility in play. Holding URNM, NXE and last week added UEC. UEC? We shall see (a rhyme). The u3o8 price and its tracker, SRUUF, are still firmly trending down off the high of u3o8 100 a year ago (current: 72.63).
• Agricultural: Wheat is trending down, Corn is on a rally attempting to break its downtrend, Sugar is trending down, Soybeans bounced but have not broken the downtrend and the general Commodity Whack-a-Mole game is fully in play here. I have proven not to be good at that game and if I do anything in this sub-sector, it will probably be with “Ferts” NTR and/or MOS, which are attempting to break their long downtrends. Check it out:

NTR

MOS

Global Stock Markets

Reference the USD/GSR question for the answer to whether or not Global can bottom vs. the US stock market. Then to be bullish, it would be a matter of determining whether global will go up better than the US or go down less than the US. Out-performance need not be to the upside, eh?

Here we see ACWX having made a false breakdown below support (but held well above the bear market trigger) and fully recovered above the SMA 50. Taken at face value, this – especially after Friday’s pullback – looks like a buy.

However, as yet the ACWX/SPY ratio is only hinting on a bottom. Again, USD especially, should be watched for continued rally (relative bearish for global) or failure (relative bullish for global).

If we go bullish on global vs. US and if that bullish relativity is to the upside, this segment will come to the fore, stock market wise. For now, it’s a potential relative low with RSI and MACD positively diverging. That’s not nothing.

Portfolio

Gold is long-term risk management & monetary value/stability in a balanced portfolio.

Taxable Account

In order of position size, this account is overwhelmingly in cash and equiv. And why not collect near risk-free income during a risky phase that could pivot bullish or bearish? When I get my signals one way or the other, then I’ll lean in to the direction of the signals.

Trading Account

No positions.

Roth IRA (non-taxable, no contributions)

The IRA’s chart is now hinting to break upward from its consolidation. It all looks normal because the consolidation not surprisingly began after a bit of an excessive upside channel breaker. Steady as she goes, IRA chart. If so, I will press the long side of things.

Cash/Equiv. is 84%, as it was last weekend, even though some items were sold and some added. It’s an on-the-fly rebalancing I tend to do. But as noted above, I’ll be ready to lean in and be in tune with the market’s internal rotations/favorites, if the next major move is up. For now, the hedges are installed here too. Again, why not collect income in the meanwhile?

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 nftrh.com for trade info, if interested (not that you necessarily should be). Also, you can follow on X @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.