We’ll keep it simple in managing this morning’s decline. The silver support zone has been 19.50 to 19.75 (chart from NFTRH 300 below). The lower end of this range is getting tested this morning. Any lower than that and the situation becomes abnormal to a short-term bottoming view. A hold of that area ups the aggravation level but would probably be ultimately constructive.
The real or asset adjusted price of gold continues to make positive progress in several areas. Below we update gold ETF GLD vs. a few other asset classes, primarily commodities, which makes up the ‘real’ price of gold and the big picture macro plan per the top pane of this chart. If Au-CCI remains strong, the S&P 500 (lower panel) would be expected to weaken again at some point.
The market bounce is providing a potential opportunity for those who care to, to re-short. As you may know I covered a short on SPY on the recent decline and have been looking to re-enter it. The S&P 500 bounce target has been 1950 to 1960, but let’s refine the situation for the SPY.
While the two charts below do not technically show a correction that is over, I have released the remaining hedges I had (via DUST) and am planning to use cash levels for any remaining risk management. This is just an FYI for anyone who is interested and I continue to suggest people go with the style they are most comfortable with, whether it be accumulate slowly on corrections, regulate cash levels, hedging or simply holding positions.
The headlines are talking about markets being down on Fed rate policy fears due to employment cost increases, declining consumer confidence, Argentina this and European deflation that. In other words, the headlines are coming out with reasons why a market that was heavy to begin with is down hard a day after the Fed rolled over and committed to its ongoing inflation. They always need a story.
[ed: Excerpted from NFTRH 301’s opening segment. Those looking for paint by numbers directions and casino game instructions (talking to readers at a certain site that may or may not re-publish this article) feel free to just skip the article. You will not get what you are looking for. The balance of NFTRH 301 did the nuts and bolts technical work on the relevant US and global markets, precious metals, currencies, etc.]
[edit 2] Based on reader feedback from another site, it appears I do not understand inflation, nor that gold’s purchasing power is superior to that of the USD over the long term. What I take from this is that if you post anything positive (like USD’s ‘price’ potential) about the buck and/or negative (like gold’s price vulnerabilities) about gold certain handbook carrying people in the gold ‘community’ are going to lash out first, and read/consider second. In other words SSDD.
Take a look around the gold bull landscape and tell me how many of them are featuring a chart like this, showing the US dollar in a bullish short-term stance (to go with the weekly bullish stance we have noted for so long in the ‘Currencies’ segment).
This is not to say that the US dollar has real value. How can it when it is hopelessly dragged down by a national debt-for-growth obsession. But as with gold, value is one thing and price is quite another. It is just that one (USD) receives a price bid due to a ‘nowhere else to hide’ sort of mentality by the majority when asset market liquidity becomes constrained and the other (Gold) receives a more solid value bid, over time.
In light of the breakout in base metals (which I am still looking at as only a trade via DBB), and bottoming situations in other areas like Uranium (hat tip to subscriber ‘Hammer’) and the REE’s, it is time for a brief update on mineral commodities.
There is no denying the cautious tone of our updates about the gold stock sector this week. Sometimes they appear prescient and then there are other times, like today. Yesterday’s update stated:
The following is an excerpt from NFTRH 298’s 38 pages of hard hitting, no b/s market analysis, which also included extensive work on the precious metals along with commodities, currencies, global markets and market sentiment.
NFTRH subscriber (7.6.14): “You should publish pages 15 and 16 of this weeks report. I would like to share it. It is a great summary of the current situation.” Pages 15 & 16 take it through the Dow chart below. I decided to go with the whole segment on US stocks.
Happy Independence Day America! Your markets are bullish… and over bought, over loved and running on increasing momentum.
The graph tells a story of the end of the Greenspan era’s commercial credit inflation, which was resolved in 2008, and the beginning of the Bernanke era and official credit inflation, which is ongoing.
I am taking profit (+8% from NFTRH+ highlight) on the most recent idea, Control4 (CTRL). The measured target is higher and others may want to go for it. I want…
Within the context of a potential market blow off scenario that Fed policy seems bent on instigating, we continue to look for candidates that have not yet moved aggressively. On that note, CTRL, which can claim some of the ‘Internet of Things’ hype (iOt, another hype flavor added to last year’s 3D Printing/Additive Manufacturing?) in the home automation space.