Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? At this point, over eight years later, the S&P 500 has set a series of inflation-adjusted record highs based on monthly averages of daily closes.

Let’s examine the past to broaden our understanding of the range of historical trends in market performance. An obvious feature of this inflation-adjusted series is the pattern of long-term alternations between uptrends and downtrends. Market historians call these “secular” bull and bear markets from the Latin word saeculum “long period of time” (in contrast to aeternus “eternal” — the type of bull market we fantasize about).

….continue reading 5 more charts & analysis HERE

…also from Jill:

World Markets Update

• An investors worst nightmare?
• Analyzing the summer doldrums
• Plus: Time for some trading excitement

October is typically viewed as an investor’s worst nightmare.

Our bias tells us that fall is crash season. Open your history books and you’ll find plenty of horrifying drops ranging from the 1929 crash that sparked the Great Depression (Oct. 28-29) to the infamous Black Monday crash in 1987 (Oct. 19).

Yes, October can be volatile. But the dog days of summer are far worse, on average.

I know this probably goes against all your trading instincts. After all, you’ve heard stories of the painfully boring summer trading months. Cyclically, start of the third quarter isn’t an ideal time to jump into new long-term investments. That’s because July is the beginning of the Nasdaq’s worst four months of the year.

But the market fought its way to new highs last month. A third-quarter slump has been put on hold. 

Perhaps the summer doldrums are waiting for a new trading month. Today is August 1^st. Nothing of consequence is supposed to happen in August. The movers and shakers are living it up at their beach estates and trading rooms are quiet, right?

Not exactly. According to the Stock Trader’s Almanac, August is the worst month for the Dow, S&P, and Nasdaq since 1987. If there’s one month investors should avoid, it’s not October. August is the real performance killer. 

Here’s an interesting tidbit floating around the financial blogosphere right now:

“August has been the worst month for the SPX over the last 30 years, averaging a -0.86% decline,” MKM Partners technical analyst Jon Krinsky noted in a recent report. “Of course this is just an average, and there have been some strong gains in August especially during strong uptrends (2014, 2009, 2006).”

Surprised?

You shouldn’t be. Remember the eurozone panic six years ago? The swift crash of late-July and August knocked the S&P within a hair of a legitimate 20% correction in 2011.

More recent years haven’t brought as much turmoil. But they haven’t exactly been uneventful.

A tame July led to a modest August rally in 2012. The market gave back almost all its July gains in August 2013. And a late July dip was eagerly bought in 2014.

The summer of 2015 was a doozy for investors. After an uneventful start to the third quarter, the market started to unravel in late August, falling double digits before the end of the month. That’s right – August 2015 was when the pullbacks started in the small-caps and biotech sectors that would eventually turn into nasty bear markets.

At a glance, it’s easy to see how August has been anything but boring over the past few years. In fact, we didn’t see a break from the market madness until last year, which turned out to be an uncharacteristically quiet period for the major averages. The S&P 500 finished out August 2016 at breakeven as it consolidated late July’s sharp post-Brexit move. It was our first real taste of the summer doldrums in years.

Could we be in store for another tumultuous trading month this August? Anything’s possible. We saw additional weakness appear in the tech sector yesterday – yet earnings are coming in strong so far this week.

We’ll see how it all shakes out soon enough. Don’t sleep on August – it could turn into the most exciting trading month of the year…

Sincerely,

Greg Guenthner

Clive Maund analyzes the significant increase in Large Spec positions in gold and silver in the past week, and the gold stocks to gold ratio.

The significant increase in Large Spec long positions this past week in gold and silver from a very low level might be cause of concern to some, since it of course increases the risk of a reaction in these metals, but there is another much more positive way of looking at it, which is that, in the face of a continued albeit incremental rise in the prices of gold and silver, the Large Specs have suddenly realized their mistake in bailing out over the past couple of months, and are scrambling to get back on board.

On gold’s 1-year chart we can see that it actually made an important breakout last week, from the Dome pattern shown. So far the breakout is marginal, and there is still no confirmation by momentum, which has not broken out of its downtrend, but that is not the case with silver, which as we will see HAS broken out above a similar Dome pattern. Gold is approaching a zone of considerable resistance approaching its April and June highs at the top of the Dome, and once it breaks out above this it should really get moving.

While there was a considerable increase in Commercial short and Large Spec long positions in gold last week, they are still at modest levels that permit a big rally by gold from here. Certainly they are a long way from being bearish.

 

Click on chart to popup a larger clearer version.

Silver, meanwhile has made a more decisive breakout from its Dome pattern, after putting in a capitulative low a few weeks ago, and is in position to push on past its moving averages towards resistance in the $18.50 near to its February and April highs. Like gold there is still no momentum breakout (MACD) but it is close to it.

After falling to extremely bullish levels a week ago, there was an uptick in Commercial short and Large Spec long positions in silver last week, shown on the latest COT chart below, which is taken the mark the dawn of the realization of their mistake by Large Specs in dumping all of their long positions over the past couple of months, and such an uptick often occurs at the start of a major uptrend. 

Click on chart to popup a larger clearer version.

It is enlightening and useful to observe the long-term silver to gold ratio chart at this juncture, as it shows that the ratio is still close to levels that typically mark an important sector bottom. This chart by itself clearly says there is plenty of room for a major bull market to develop from here.

Lastly we will look at the important gold stocks to gold ratio, with stocks being represented by GDX. This ratio is at its lowest at bear market bottoms, because that is when fear is at its peak, and when investors are fearful they choose bullion over stocks, as they regard it as a more solid investment. At the end of 2015 we saw an extreme low in this ratio which marked the final bottom, and what has been happening since as far back as mid-2013 is that a giant relative Head-and-Shoulders bottom has been forming, and right now we appear to be at a great entry point for stocks, because the ratio is very close to the Right Shoulder low of this relative Head-and-Shoulders bottom. The huge surge by the ratio out of the Head of this pattern that occurred during the 1st half of last year was a game changing move, which showed that the tide was turning and that a new bull market was being birthed. Note that the ratio has to get to 0.26 before it even breaks out of the H&S bottom, which is quite a way above its current level, and once it does break out of the base pattern it is likely to push on quickly to the resistance level shown in the 0.36 – 0.38 zone, which will mean BIG gains for stocks.

We will now look at the GDX to gold ratio in more detail on its 2-year chart, for important guidance re timing. The 2-year chart is quite dramatic as it shows the massive advance in the ratio during the first half of last year, and remember that gold was rising at the same time, so this chart is showing the outperformance by gold stocks during that period, which was certainly very impressive and marked the birthing of a new bull market. After such a huge outperformance, stocks were certainly in need of a rest and that’s why the ratio bedded down into a big consolidation Triangle, but as we can see this Triangle is now fast closing up, which is why we have been buying the sector aggressively in recent weeks, because breakout should be to the upside and lead to a big uptrend, an outcome which is made much more probable by the now strongly bullish gold and silver COTs following the Large Specs giving up and bailing out at the worst possible time in recent months as they are always prone to do.

Conclusion: it couldn’t look better for the sector, which suits us, because we are bullish and now heavily long.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

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Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. 
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

Charts courtesy of Clive Maund.

1. SILVER GREEN ALERT – One of the Best Buying Opportunities in Years…

by Clive Maund

There will be no equivocating, fence sitting or any kind of hedging or expression of doubt in what is written in this update. Let me be absolutely clear: – we are now at the threshold of a barnburner rally in the Precious Metals sector, and silver is set to scream higher driven by a massive short covering panic, because short positions in it have ballooned in recent weeks to levels way above what we saw in December 2015, when silver hit its final bearmarket bottom, before the big sector rally during the 1st half of 2016. 

…read more HERE

2, Our Doom Index Is Heating Up…

   by Bill Bonner

The Dow rose another 100 points yesterday. Can anything stop this bull market?

At least we know the answer to that question: Yes.

When?

Longtime Diary sufferers know better than to trust our market timing advice. So rather than rely on our instincts, the Bonner & Partners research department has developed a Doom Index to guide us.

What is it saying now?

….continue HERE

3. A Victory? Petronas cancels $36B LNG Project

By Michael Campbell

As B.C. jacked up demands Petronas has decided to pull out of a great industrial project with good high paying jobs and tax revenue to fund social programs. The construction phase was supposed to create 4,500 jobs alone. Also what does the recent run up in the Loonie mean for interest rates. Higher? Lower?

….read it all HERE

What do they like best? Highflying growth stocks such as Netflix, Facebook and Amazon

We are now officially in a “kids market.” Invest accordingly.

The concept of a “kids market” was introduced by Adam Smith, the pseudonymous author, in his classic book from the late 1960s entitled “The Money Game.” He used that phrase to refer to an investment environment in which the advisers and traders making the most money are those too young to remember the last bear market.

That would certainly appear to be the case today. The 2007-2009 financial crisis and bear market is now more than eight years in the past. Anyone younger than in their mid-30s probably wasn’t even out of college or graduate school during that bear market, and therefore has little or no direct investment experience of a severe bear market. Their attitudes toward downside risk are entirely different from those of us who lived through that crisis, the bursting of the internet bubble, or other bloodbaths of investment history.

These “kids” are often the ones making the most money in stock market right now, handily beating the S&P 500 SPX, -0.27%  

….continue reading HERE