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NFTRH++ Coming Soon

Picture a guy with a little cap with a propeller on his head. A propeller that would spin every time he saw an attractive looking stock chart. That was my beginning… chart guy. To this day I am one of…

Beginning in the bear market of 2001 and into my education about about meddlesome central banking system that keeps a debt-driven financial system going, I went macro, increasingly over the years. Hence, you get those crazy, multi-colored, multi-market/indicator charts telling historical stories about yield curves, bond market divergences, inter-market relationships and whatever else I can think of to give us technical views inside or beneath the markets as opposed to views on the surface of them (regular TA).

Enter Hammer, who I got to know years ago as a then NFTRH subscriber. I got to know him from a professional standpoint (hedge fund guy) and from a personal standpoint to a degree (a person of integrity and generosity). We have had personal, hockey related, macro and trading discussions over the years. Mostly in online chat context, but also over the phone. I know enough about the guy to know that he’s my kind of guy. I would not bring on just anybody.

What I like best is that Hammer’s TA is so very different than mine. He’s got time cycles, EW counts and other things that are beyond my simpler version of TA (where nominal stock charts are concerned). So in that respect, it is capability added and thus, value added to the coming add-on tier of NFTRH service. The best part is that NFTRH++ is not going to be for everybody, so the standard premium tier of service (NFTRH weekly reports, NFTRH+ in-week updates and a log of Daily Notes) will remain as they are, and at the same price.

We have details to work out. I expect that my daughter Izzy will help in some capacity (admin? editing? moderation?) as well when Hammer and I get settled in with it and when she finally gets her short film completed (challenges aplenty).

As to those details, we anticipate that along with the (thus far public) ++ posts you’ve seen at the website there will likely be a live chat board like a Discord group for further discussion of any and all topics related to NFTRH++ trade ideas. I envision it as free flowing information, going both ways. We’d all be equals. I will be there, but do not intend to be a focus. Trading and stock charts will be the focus and hence, Hammer.

That’s what we’ve got for now. Things will probably evolve along these lines with allowance form newer/better ideas going forward. You can keep an eye on the NFTRH++ page for any updates to come. When we get a good, well oiled system worked out we’ll add the tier as part of the premium service.

Precious Metals

I was guarded through FOMC week with hedging. The hedge lost some money but did its job. Hammer illustrated a case for a long setup for GDX. I tend to “touch and feel” a chart and let it speak to me (its lies or truths) of its beauty and symmetry, while he relies on time and counts. I believe that he does not require GDX to have any particular “beauty” to it.

Anyway, my bigger view is and has been bullish and so the hedge was dropped and Gary put on his big boy pants. I have a small short position against gold and a larger one against the Euro (pro-USD). This is short-term noise and risk management.

If we are correct on the macro (and so far we are), the miners could start to leverage gold’s standing within said macro. That leverage would return after the macro-funda conclude their correction/consolidation as relieved sentiment continues to grip the markets.

Nominal gold and the “real” price of gold as measured in many other assets and indicators are in bull markets. That means that the positive leverage that most gold bugs gave up on long ago can regenerate after years on the outs, to the surprise of said dispirited gold bugs.

All ratios are in some form of correction or consolidation. All ratios are also still trending up. The “real” price of gold is rising, whereas it dropped or under-performed for a majority of the 2004-2022 period. 18 years (+/-) on the outs. All the while with gold bugs complaining. But they shouldn’t have. They should have accepted the reality that the macro was not right where the real fundamentals are concerned.

Well, now the macro is right. And until charts like the above are busted (as opposed to healthily corrected), the macro will stay right. So when will gold stocks start to leverage this macro performance by gold?

Despite a moderate correction from the April 21 high the HUI/Gold ratio (daily) has hung in there quite well. It has certainly not changed its trend to up, but it is pesky and intact.

Dialing out to the bigger view we again reference the 2001-2004 analog and find HUI rising, the Gold/Silver ratio rising, Euro and Swissy firm and the USD weak… all as per the analog. What’s missing? The HUI/Gold ratio. If you look closely you can see I’ve inserted a green arrow under the ratio to show its tepid but stable performance over the last year. The table is set. Now, will Huey come and eat?

I think he will, likely when the next rally comes.

Staying with the big picture theme (as we’ve done enough short-term work in-week, including Hammer’s work), it continues to look like the 500 target can be approached or hit sooner rather than later. If the recent correction again proves to have been a moderate one, many players could simply give up waiting for big downside buy opps and just get a FOMO on.

That is how it feels to me at the moment. A big gulp by Huey at the macro table and perhaps a wave 5 end to this phase of the bull market prior to a much needed major correction. That’s just a scenario folks, not a prediction at all. Just a viability.

What could drive such a last chance power drive? Well, we are now nearly half way through Q2 and the same chart we used to gauge a positive Q1 reporting season is furthering that message. Gold/Oil is just one consideration for gold mining operational funda, but it’s an important one. Could we perhaps have a next and final big leg in gold stocks that hits or impales the target and gets the HUI/Gold ratio off the ground to boot? We could. Could it be fueled by increasingly positive “sector” funda like that shown here? It could.

HUI and the Gold/Silver ratio are blessedly aligned, as per 2001-2004. However, note that beginning in 2003 the ratio began to decline while gold stocks surged higher before a long correction ensued. That could be a guide to today’s situation as well.

We have been watching silver to see if/when it will stop dropping in relation to gold and take up leadership. The final massive surge in HUI in 2003 came with gold topping out and starting to drop vs. silver. It is no coincidence that that was the beginning of the inflationary macro era where gold soon began to under-perform not only silver, but many other commodities as well. See where we are going here?

The Commodity Super-Cycler squirrels may finally find their nut. And boy will they tout “told you so!”. Too bad you were so “perma” through all sorts adversarial macro backdrops, boyz. I prefer to take up a theme when it is right to do so, even at the expense of not gaining the notoriety the promoters do.

So we will continue to watch the Silver/Gold ratio because I have a fairly strong hunch that when it bottoms it is not just going to flounder and base but instead, tear ass in a northerly direction.

Commodities

Look who banged through the target on Friday. TSX-V, holder of the most speculative commodity/resources related equities took out our next target of 680. Whether it stays taken out is soon to be determined. But it is quite notable.

A wider angle view shows a base breakout and some more resistance around 700. But one can dream, can’t one? Dream about a big rally to 835?

“835? Is that all you got?” asks the monthly chart. “You mean that 835? Not even near the highs of the last little phase, post-pandemic? THAT 835??”

Dog gone it, for reasons beyond me the TSX-V looks more like the HUI/Gold ratio in its history. What if gold stocks outperform gold (meaning speculators are involved) and da ‘V’ follows suit?

I am riffing here and certainly not trying to lead you into the danger of this speculative graveyard where the bodies of many a commodity/resource bull are buried. But I sure as shit am going to be open minded about what may be ahead. Again, this is just word porn for speculators, but a major move in this index could mean early retirement (too late for me) for those who time it right and view it for what it may turn out to be.

Okay, easy now. Back on planet earth, let’s keep our feet on the ground and call the above a possibility to watch for. Referring to the Silver/Gold ratio above, a bottom and upturn could be a signal for more bullish outcomes for da ‘V’.

If the USD continues/resumes weakening we should eventually morph into something like the post-2003 inflationary environment. Again, and I can’t stress it enough… watch silver vs. gold.

But for now…

Commodity indexes/ETFs: Still in long consolidations from the 2022 highs. Commodities cracked after the tardy Fed finally decided to start fighting the inflation it was primary in creating. However, it is time to start thinking about what a new inflationary/stagflationary macro phase might look like for commodities. It might look bullish, is what it might look like.

The CRB index looks better than GNX and DBC on the shorter-term as it has been biased up while the other two go sideways at best. This is owing to commodity mix.

As to the chart, let’s think about the inflation trades that followed gold in 2001. A big and relentless leg up was followed by a correction before the big spike blowoff as its final act, into Armageddon ’08. If something similar were to happen this time, we might see today’s correction resolve with an upside acceleration into and eventual important high, and whatever coming broad market crash is out in the future. But that rally would be tradable.

Trump is trying to devalue the US dollar (“America great again”? Yeah, I don’t think so) and with global trade tied up in knots with no real way to quantify the effects of this economic war, we could easily see a commodity grab of sorts, or at least a promotion of one that players chase higher until it inevitably blows out one day.

As with the TSX-V index, this could be a retirement maker. Or just a lot of fun. It’s also gonna suck, because what comes after, if it equates to Q4, 2008, will not have the full power of the Fed (e.g. Bernanke in 2008 & Powell in 2020) and the license to “INFLATE AT WILL!” after the Continuum’s trend was blown up in 2022. New macro, new rules. Eh?

US Stock Market

Aside from the prospect of commodities finally rising, the reality is that they are primarily cyclical assets and it would probably be better than not for commodities if the stock market continues to be firm or at least does not resume a hard bear phase. We have been working to a bear market rally (BMR) theme, but are also working on the question:

Stagflation or Deflation?

If it is the former, stocks could hang in there while under-performing on balance. If it is the latter stocks should resume the bear in a hard manner and probably take commodities with them.

I caught myself feeling satisfied with several bull stock positions last week and reminded myself to take profits. That is due to SPX in proximity to its decision point as to whether an A-B-C bear market rally is ending (orange) prior to BMR resumption, or an A-B-C bull market correction is going to look for new highs (black). The B/2 high of 5787 will go a long way toward providing an answer.

NDX near a similar decision point and just a tad more bullish. I have favored Tech stocks for my “bull” stocks because I believe they would fare better in a trade war environment and a bouncing US dollar environment. But NDX has not taken out equivalent of its B/2 high of 20292 and currently rests below thick resistance.

Internally, we find NDX flat with SPX while the Semiconductor index is in full leadership loss mode. On balance it’s a bear-biased picture by the US market leadership chain.

I would take more seriously the current Dow Theory negative divergence by the TRAN if not for this old fashioned indicator’s spotty record in modern times, beyond the horse-drawn buggy and steam engine eras. Distinguished ascot-clad men of yore have had too poor a record of late. A positive divergence led to the bear phase of 2022 and a negative one last year led to the “Biden rally”, pre-election.

So now we’re supposed to believe the hard negative divergence as bearish? We could well swing bearish tomorrow. But it won’t be because of this indicator. Sorry Clark, fluff that ascot and have another cognac.

Speaking of divergences, the positive one we noted last week by the SPX A/D line is still in play. It too was fairly unreliable with only a minor negative divergence prior to the 2025 bear phase. But it sure did a better job than the Tranny above.

All in all, I don’t see reason to have firm conviction one way or the other on the stock market. Hence I decided to take some profit birds in hand rather than do what I have sometimes done and let them fly away. Markets will telegraph what comes next soon enough.

US Stock Market Sentiment

Dumb money apparently thinks that now that Trump is making a few sounds about making nicey nice with some trade partners, all’s well again. Dumb money is gulping down stonks even more aggressively now, while Smart money is fading. A degrading contrary-sentiment picture here.

A degrading contrary-sentiment picture here!

Here again are the 7 components of the Fear/Greed index. Put/Call ratio is labeled “fear”, but it is heading greedily south quickly. The same can be said of volatility.

This market is no longer sporting any sort of contrarian sentiment benefit.

Investment managers spiked with the bull activity in prices, as we knew they would.

Ma & Pa were creeping more toward bullish on May 7.

Ma & Pa tend to be more cautious than other sentiment groups because Ma & Pa take their own views very seriously. As they should. I found it pretty funny how they rate newsletters and outside research even lower than the financial media. Not a resounding endorsement of newsletter services!

Global Stock Markets (daily charts)

On balance, global stock markets continue to trend higher vs. the US stock market, despite the recent normal pullback.

The nominal picture still bullish, with the caveat of a potential future bear market sentinel (lower low to the August 5 low) that was put in back in April.

Moving on to a few markets, Europe’s STOXX 600 is still ‘V’ rallying hard. Unlike the US, its stock markets are rallying along with its currency. On the face of it, it is healthier than what the US is doing.

India’s BSE Sensex is stopping to think about and test its downtrend channel breakout.

Canadian TSX is ‘V’ spiking to test the highs, and unlike many other markets never did make a critical lower low. May mean something. May not. But Canada is a “commodity/resources” heavy country, so that may play into the discussion on commodities above, including the TSX-V.

Fellow commodity/resources economy Australia did get technically hammered, however. Regardless, if Canada distinguishes itself going forward, I would expect the Aussies to as well.

China large caps continue to quietly trend upward.

Let’s again note the new uptrend in China large caps vs. US large caps. The bottom, upturn and new trend in FXI/SPY could well continue longer-term. But it is potentially vulnerable to continued under-performance in the short-term.

Japan is steaming back toward what looks like another short setup. Boy, does it ever. Recall we noted the same just before the big plunge. I failed to do anything with it. But this time I’d like to find a vehicle for shorting if one is available. Anyone?

If this were to be undertaken, it’s got a handy stop-loss to suit risk tolerance above the down-turning 200 day moving average. Oh how to short Japan?

Portfolio

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

Taxable Account

In order of position size. Cash/equiv is quite high. I am pleased and a little surprised at how well the Uranium bottom feeds are going. I’ve slowly been increasing positions in gold miner NEM and as noted last week, added AEM, long-held in the IRA, to this account. Along with RGLD and KGC, I want this account to hold solid premier gold stocks that I don’t feel the need to babysit. Bull stocks are down to just RDDT and ZS now.

If the TSX-V/Commodities play looks to actually happen, more commodity/resources stonks will populate this account.

Trading Account

No positions. This is where I’d like to nimbly short individual equities when I start to feel the BMR is concluding. I don’t see much opportunity currently for trading long. Regardless, the NFTRH++ service will be geared (both ways) for traders going forward. I will most likely not note day-trades here, assuming I even undertake any.

Roth IRA (non-taxable, no contributions)

The chart continues to hold its upside breakout from consolidation. I aim to keep it that way and if things go the way I suspect they might (silver vs. gold, commodities and continuing gold stock bullishness), just maybe this chart can get some upside acceleration. Let’s watch the market’s signals for or against that scenario, week to week.

Cash and equivalents are at 80%. That is too high if an inflation trade of the sort described in the report above engages. I am watching closely. Meanwhile, the chart above makes no apologies. New highs in an environment like this is okay by me. It’s just that at some point I want to be ready to speculate, if that is the macro ahead.

Remaining bulls stonks are CVNA (profit taken on partial position), GOOGL and DOCU. Excellent profit hesitantly taken on Potash play, IPI (thank you again Aaron, for getting me to look at the chart).

Gold stocks are held and I don’t see any here that I have a desire to sell. That could change in any case with one political or execution SNAFU. But all in all, I am a gold stock bull and have selected those I feel best about, along with a couple speculations. I’ll hedge if/as needed, but try to remember to take the darn profits on the hedges if they come about. “It’s a bull market, you know.”

Gas play AR is on message and Nickel (w/ Cu) play TLO is held, like forever. Stuff like these and the Uraniums could do really well in a theoretical silver-led inflation trade scenario.

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.