Notes From the Rabbit Hole, #877

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Silhouettes of a bull and a bear representing market trends, with a rabbit in the center.
NFTRH 877

September 17

In his Jackson Hole speech, Jerome Powell fairly well leaned to the side of a rate cut coming up at September’s FOMC meeting. But interestingly, CME traders leaned just a bit away from that view. Their view prior to last week’s economic data and the Powell speech was 85% for a cut. Today it sits 75%. Still pretty good odds, according to the wiseguys who “play” the Fed funds/futures game.

Caveat being that we have noted CME traders off-sides many times in the past. They are little more than a windsock for the current popular view, in my opinion. Currently, that view favors a cut. But there is some doubt in the picture as well.

Bar chart showing target rate probabilities for the Federal Open Market Committee meeting on September 17, 2025. The probabilities indicate 75% for a target rate of 400-425 bps and 25% for a target rate of 425-450 bps.
CME Group

Stock Markets

The U.S. stock market celebrated by testing its all-time high of the previous week…

Line chart showing the S&P 500 Index (SPX) performance over time, including key levels, gaps, RSI, and MACD indicators.

…and global stocks celebrated even better, ticking a new high.

Stock market chart displaying the Ishares MSCI ACWI ex U.S. ETF performance with trend lines, moving averages, and technical indicators such as RSI and MACD.

…calling into question whether or not the correction in global stocks vs. U.S. stocks is ongoing.

Line chart showing the ACWX/SPY ratio with trend lines and indicators such as SMA, RSI, and MACD, reflecting stock performance over time.

The USD will have something to say about that. 75% of CME traders see the removal of another fundamental brick in Uncle Buck’s foundation in September. Last week the “completed A-B-C bear market rally” view grabbed the baton back from the “5th leg up to 102” view. As we have noted for years, a weaker USD has tended to favor global stock markets over the U.S. stock market.

Chart depicting the U.S. Dollar Index (DXY) with annotated price levels, moving averages, and technical indicators such as RSI and MACD over time.

Personal Management

As you will see in the Portfolios segment, the little chart displayed each week has ticked to an all-time high. Yay me! Err, it’s not special, obviously, in this market.

I plan to continue a regimen of caution at caution points and speculation at relief points. If this week follows through to last week’s theme, a relief point will be in effect. I may even lever in further after net adding several items last week.

But the regimen of risk management will remain in place and my view is that there is going to be energy in the markets at around the time of the September FOMC (+/-). That +/- could be measured in days, weeks or even months. But ultimately, I continue to favor the setup that sees this is as a giant suck-in of the innocents, behind Jim Cramer and the eyeball harvesting media, with the Pumper-in-Chief residing in the White House.

Can you imagine the hype campaign coming out of his Truth Social orifice after Powell finally is perceived to have bent to his wishes? We exist in a post-common sense society where noise and bombast are valued over quiet reflection and logic.

The popular tout will probably be something like “rates are coming down because president Trump is a businessman and knows what he is doing… happy – and prosperous – days are here again!”

In my opinion, the reality will be more like ‘the Fed only drops rates for reasons‘. Reasons other than a loudmouth Reality TV star in the White House calling the Fed chief names. Reasons like fading inflation (check) and a decelerating economy (check). Reasons like what history portrays…

Line graph showing the 3-month T-bill yield in orange and the 2-year Treasury yield in green, along with annotations indicating bear markets and market dynamics over time.

If this chart holds true to its messages of the last two real bear markets, a whopper of a bear could be brewing even as casino patrons lean the opposite way. Let me ask you, what better way for a bull bubble to end and a serious bear market to begin than having the masses all huddled on the other side of the boat?

It appears to be a great bear setup. Before rushing to short this mess, we might consider the 1970s playbook, which saw stocks go nowhere with the bear market being in the “real”, gold adjusted price of the S&P 500. Shorting the stock market was questionable then. Avoiding it in favor of gold was not.

Precious Metals

Happy days are very likely not here again. A stock market rally that is running on emotion is here. I am going to trot this chart out again, because in concert with the chart above and several others (including steepening yield curves), the message is contrary to a “happy days” message. Quite so.

Line graph showing the SPX/Gold ratio over time with key points marked, including 'Last chance' indicators.
A cheerleader performing at a sports event, wearing a blue and white uniform with gold pom-poms, smiling as she dances with fellow cheerleaders in the background.

If you’ve known me over the years, you know I’ve never held back on criticism of the gold cult community. Always sloganeering, imploring, lecturing and cheering the unwashed masses for their ignorance about monetary fidelity, purity, righteousness.

As you know from some of my more opinionated writing, I too have the view that the system is corrupt, morally if not functionally bankrupt and just plain unjust to a majority.

But we are managing markets, not ideals. When managing markets we have to do what the market’s signals instruct. So for the majority of the 2012-2022 decade I had to tune out gold bug idealism and write about things I did not want to write about. Things like the ongoing policy bubble and its inflationary operations, which supported stocks over gold.

So of course I snapped to attention in 2022 when the long-term (down/disinflationary) trend in Treasury bond yields broke and busted upward. Something had changed. One important thing that changed was that stocks made a top in relation to gold per the SPX/Gold chart above. Today, that chart shows a recovery in progress to correct the overdone fear in stocks and froth in gold from last spring. But that is all it is in my opinion; a correction. A last chance of sorts to adjust one’s view from pro-stocks to pro-gold.

The point is, I am someone who is not shy about calling what I see and keeping my (in this case pro-gold) bias under wraps when appropriate. But in this new macro I am able to call what I have wanted to call all along, a new phase in the gold market vs. the stock market. I believe I have earned a credential of trustworthiness because I did not perma-call gold-bullish through a decade of futility. I think that legitimizes my opinions when those opinions are bullish. Eh?

Moving on, gold’s daily chart has long since bled out its springtime over-bullishness with a long consolidation, which is taking the form of a triangle, which you can read as either Symmetrical or Ascending. Both are usually perceived by TAs as continuation patterns and the odds are, considering it’s a bull market, on continuation upward. Formerly overbought RSI and MACD have been completely reset. 3450 looks like the key point to a successful breakout.

Line chart depicting the historical price movements of gold, showing support and resistance levels with annotated technical indicators.

Silver never did quite get to the target of 40. But it too has reloaded from somewhat overbought and has more than enough fuel now to get to and take out 40 and beyond. An alternate target resides at 42. But if silver gets gets a bit in its mouth, well, you know what it can do.

A line chart showing the price trend of silver over time, with multiple candlesticks and indicators including moving averages and RSI.

Now, let’s have a little eye candy for you silver bugs out there. If the era of disinflationary macro signaling is over (ref. the 30yr yield “Continuum” breakout), might not the post-2011 era of disinflationary macro signaling of gold over silver get flipped over and see a real upward move in silver over gold, even if just for a sustained rally? It might. Through decades of ignominy, silver leadership has at least earned viability to take the lead and take the pressure off of its most fervent pumpers, I mean, supporters.

Line chart showing the Silver/Gold ratio from 1978 to 2025, with key indicators marked, including historical peaks and valleys.

Here is the daily chart, holding a positive bias last week. This was a primary reason I added more commodity/resources related items last week. Obviously, follow-through is needed in order to safely rule out Friday as having been a big, hype ridden whipsaw.

Line chart depicting the Silver to Gold ratio, featuring price movements, moving averages, and trend indicators like RSI and MACD.

In checks Huey’s monthly chart with its stunning view of a long-held target about to be registered. Actually, the target is registered, when you consider the +/- tolerance to the 500 target and last week’s high of 493. We are at target. A stop sign? I don’t think so. But the target is for all intents and purposes, in. Pure traders who may have been waiting for this moment should take notice.

Line chart showing the Gold Bugs Index with highlighted key support and resistance levels, along with annotations indicating targets, corrections, and market phases.

Before continuing, let’s take another quick snapshot of a frothy sector. Frothy and bullish. At some point the correction is going to come. But when a real bull market is in play, that “sometime” can hold out longer than you’d like if you intended to be a longer-term holder and sold out in fear of momentum.

Line chart representing the Gold Miners Bullish Percent Index with annotations indicating market phases, including 'Bear' and 'Bull,' and regions labeled 'Frothy.'

When you consider how far the stock market is into the ‘all-time highs’ heavens, and considering that the macro – according to my work – has changed profoundly, any coming volatility/correction, whether here at target or somewhere above target, is likely an interruption in a bull market that is eyeballing new highs in HUI and future significant higher highs, in my opinion.

That assumes HUI will continue to leverage gold in a positive manner, rather than a negative manner per the 2004-2008 phase or worse, the 2008-2024 phase. We should continue to watch these two daily chart panels for shorter-term signals. As long as the base breakouts are intact/constructive (respectively), the play is indicated to be on.

A chart displaying the HUI/Gold and HUI/SPX ratios, with trends over time indicated by colored regions and moving averages.

My hunch is that a big correction in the gold stock sector could roughly coincide with what the analysis above tells me may be an oncoming bear market in stocks. However, if the 1970s playbook is what manifests and stocks go aimlessly sideways, maybe the gold stock sector will only consolidate and/or take routine corrections.

Gold Stock Talk

As for positioning, you know from looking at the portfolios what my favored stocks are. Not necessarily to buy now, but to continue holding. These have included AEM, NGD, RIOFF (RIO.V), KGC, AGI and others, some of which I forced myself to take full profits on (KNTNF/KNT.to and SKE come to mind). Looking at the chart, KNT actually has a flag pattern that I am going to consider buying back.

I have used pullbacks and corrections to retool holdings, adding the likes of royalty TFPM and then later, WPM (which I should have held all along), bottom feed/prospective turnarounds like NGD (long ago) and more recently BTG and even more recently, EQX.

Then there are the more speculative “basket” items, for which I’d like to see the TSX-V/TSX and SGR combo remain intact. *

Chart showing the TSX-V/TSX ratio and Silver/Gold ratio, with trend lines highlighting market movements.

* Actually, it would be beneficial for a much wider segment of the broad markets than just the “basket” specs for these two indications to remain intact.

These included TLOFF (TLO.TO), AMEGF (AE.V), OGNRF (OGN.V), PGEZF (PGE.V) and MMNGF (MMG.V), the last two of which were increased on Friday (PGE for its chart base breakout and MMG for its ongoing pullback toward its April low). The basket stuff is my way of speculating. Hole drillers by definition are risk. These are not recommendations of any kind. They are my lottery tickets.

If feel the most secure in the likes of BTG and EQX which, like NGD well before them, have begun to dig out of “value trap” territory after long periods of political issues and/or execution issues. I love stocks like AEM, WPM, etc. But valuation matters. I want some items that can grow into higher valuations if they continue to right the ship. Stocks like the two mentioned just above, along with the likes of AGI, tow around high valuations.

Silver Exposure?

I don’t have much. But if there really will be a long period of silver outperformance to gold, I’d want either a tracker of the metal’s price (PSLV or along with gold, CEF) or some silver stocks. The suspects have been GLGDF, SVM and though I let it get away from me on its base breakout, HL.

I suppose I could rationalize that, having taken a large profit on big runner SKE (Au/Ag exploration), I could consider swapping in HL to SKE’s former spot. But in general, I am going to wait for opportunities and not let my inner silver bug get out of control (especially since I don’t really have an inner silver bug :-).

I did not get to the PGM patch last week, although I did get back to the REE patch (adding a second position in MP, buying back one of the LYSDY positions that was sold, and IDR, which had also been sold). These are items that would prefer silver, and its more cyclical qualities than gold, to lead.

In PGM, I have my eye on PALL, PPLT, SPPP for the metals and SBSW for the stock (PGE.V and MMG.V, noted above, have speculative PGM exposure). SBSW is in a downward flag to test support, per this Aug. 20th post at X. If Friday’s post Powell move in markets was real, the upper support level may hold.

A stock chart showcasing the performance of a commodity/resource stock with annotations indicating moderate and severe support levels, analyzed through indicators like RSI and MACD.

I added back copper miner FCX, bombed out Lithium prospect LAC and probably a few other items in anticipation of a resumption of the commodity/resources trades.

As for other commodities, despite all sorts of crosscurrents from the trade war, I added “Fert” play IPI back after its tank job to support. We’ll see.

Stocks

But it’s a widespread rally. U.S. and global stock market positions were added or increased as well. Here, as with the “SGR trades” noted above, I want to be sure I am in tune with the markets on a short-term basis. In the U.S. markets, sentiment remains fairly over-bullish, but these Trump/Powell instigated sentiment inputs (up and down) keep just enough mental chaos in play for casino patrons so as not to top out the bull.

Insofar as I am a bull, I like ZS the company (we’ll see about that after upcoming earnings), if not so much the valuation. It has pulled back from 318 to 272. I like BABA for its chart and its global status. Ditto TM. I’ve taken all the profit I care to out of ALAB, as long as the bull runs. FTNT is a quality company not quite as over-valued as it had been, which was added on its “valuation tank job”, post-earnings. A second AAPL position was added, and whatever other bull stocks are held you can see in the Portfolios segment.

FSLR was highlighted in the notes on August 4th and finally added last week after it took off without me and then got clobbered on anti-Solar Trump jawboning. Worth a shot with a tight tolerance.

I am also holding Healthcare (XLV) and within that, Biotech (IBB). Healthcare is more defensive and it remains to be seen whether this little upside blip in the XLV/SPY ratio will continue on to become a nice bearish (internal) divergence for the stock market.

Chart depicting the XLV/SPY ratio, highlighting risk-on and risk-off periods in the healthcare sector against a broader market.

NFTRH 877 Bottom Line

With ongoing risk management in a late stage bull run, the personal regimen remains the same: play it, trade it and favor the counter-cyclical gold stock sector, which has been leveraging gold to positive effect for all of 2025.

My goal is to keep the majority of profits earned, whether through outright selling (esp. broad stocks) or hedging (gold stocks) and evaluate the new macro, which with its new rules, is going to be exciting and challenging (to interpret) at the same time.

Meanwhile, as has been the case for much of this year, it’s “week to week”.

Portfolio

Gold is and has been viewed as long-term risk management & monetary value/stability in a balanced portfolio.

Taxable Account

In order of position size. This “savings” account is getting more in the game. There is a lot of headroom to do so for a perceived ending stages rally phase. This includes Treasury bonds, which my macro view sees as positive on the interim to the next inflation problem some months or a year+ ahead.

I am trying to hold/add solid situations in sectors/markets that make sense per the analysis.

A detailed investment portfolio spreadsheet displaying various stocks, including their symbols, descriptions, total gain/loss percentages, average cost basis, and notes on investment strategies.

The taxable account carries very high cash levels as long as cash and equivalents are paying out. This is considered a savings account of sorts, rather than a speculation or even investment vehicle. The goal is to speculate around the periphery of that. In another market phase (e.g. post-crash), the account may get much more in the game.

Trading Account

No positions.

Roth IRA (non-taxable, no contributions)

The chart is in “week to week” management mode. I’d like to amplify upside and mitigate downside. That’s a tall order, but with more profit in hand but not yet booked, I will remain dialed in to short-term situations.

Line graph illustrating the performance of a Roth IRA over one year, with annotations highlighting key points and risk management strategies.

Cash and equivalents are 78% (when including 7-10 year T-bond fund IEF). Those equivalents are paying income and I want to remain aware that the odds are for cash to pay less income in the months ahead, which is the rationale for increasing Treasury bond holdings, especially short-term holdings (1-3 years, as has been the case for years now).

Meanwhile, if we do appear to be setting up for some kind of upside shit show in the broad markets, I want to get more “in”. There’s my greed talking. ;-)

A spreadsheet displaying a list of stocks, including their symbols, descriptions, total gain/loss percentages, account percentages, average cost basis, and notes.

Cash & income-generating 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.

Gary

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