A brief update on the headline US markets, namely the Dow, S&P 500 and Nasdaq 100.
Beginning with the latter, we note that Mark Hulbert’s Nasdaq newsletter writer sentiment data shows a very bearish sentiment profile, which is contrarian bullish.
Commodities of all kinds have been degrading for months now, as we have noted all along. At some point there is going to be a counter trend bounce. A couple weeks ago we noted that the price of u3o8 was going one way (up) and the ETF (URA) the other (down). That has not changed.
We had noted that the miners could bounce at any time. That time needs to be now for GDX to avoid lower lows. GDXJ, due to its modest out performance, has more room between current price and the June low.
A snapshot of the current technical status of several key markets (a lot of charts today because macro changes seem to be in effect)…
GLD broke down from the Sym-Tri (strike 1), lost the June low (strike 2) and now would try to find support at the December low, equiv. to gold 1180. Over sold, prone to bounce but technically bearish below 120 and 123.
Gold stocks are down again today and it is now decision time (for the sector if not individuals). That is because the parameter is to not make and hold a new low to the May low on a closing basis. We noted that a bounce is possible and if it is going to happen it should happen around here, at the May low with a similar over sold RSI. Either that or it would be broken with a lower low (that does not reverse quickly).
There are a lot of things in play today, including a notable rise in the gold-silver ratio concurrent with USD (finally, these two are both working together, which would be a component of our favored macro plan for future economic contraction, stock market troubles, etc.). But the point of this update is to further the point we made last week about the Emerging Markets’ potential breakdown nominally and in relation to the US market.
Silicon Image (SIMG) is another Semiconductor company (HD & Mobile HD connectivity) that has been working its way up from a basing pattern. It is another you may have noticed among my holdings (Roth IRA) as I bought it based on the look of the basing pattern, not the breakout above resistance, which just happened yesterday. NFTRH+ focuses on real events, not hope-for events.
Mellanox is an Israel based (US Headquarters in Sunnyvale, CA) Semiconductor company that you may have seen sitting in the brokerage account. I bought it because it was making what looked like its second bull flag at around 41. It has tested my patience, but has been firming lately.
Folks, first I’ll note that hedging the precious metals for me has often proven more aggravating than it was worth. That has been due to the grinding nature of this would-be big picture bottoming process. So I am just letting you know that rather than selling junior and exploration gold positions in the IRA, I am protecting them with JDST with the intent to get through the FOMC tomorrow now that some gains have been made. The biggest protection continues to be the ongoing high cash level as noted in NFTRH 308, which is the best form of risk management (in my opinion) until we get clear of some technical parameters.
Well after getting on the Russia theme this morning, I took a look at Russia’s Google wannabe Yandex and liked the chart. Considering its relative value (though certainly not a value, being an internet stock) has been hammered down due to the recent geopolitical headlines. There is a technical setup here.
Since we routinely cover the emerging markets and also their ratio to the US stock market, I thought I would update some notable changes.
This started out as an NFTRH+ update, but since any stance with the Russian stock market is a longer-term proposition, I decided it was best as a regular update for anyone who might be interested. We’ll keep NFTRH+ on mostly shorter-term scenarios (INTC being an exception), often involving US stocks (and precious metals and commodities equities when they are in setups and when the macro fundamentals indicate a good backdrop).
Sentiment Backdrop
Improving CoT data, public opinion in the dumps, Hulbert’s HGNSI at an extreme bearish level and the contributed articles at Kitco uniformly bearish (or at least acknowledging that gold is done for a while). Getting very bullish, but sentiment is not a very good timer.