Timing & trends
Here are a few global ETFs with little room to drop in order to avoid daily chart technical breakdowns. That does not mean the end of the larger up trends, but could signal oncoming intermediate corrections if they do fall further and close the week that way (pre-market is red). The question would be, are they leading the fiscally drunk US market and its chronic tweeter in chief/stock pumper?
The Euro hedged European iShares, like the Euro STOXX 50 which it mimics, is in a bear flag. The biggest volume days have been red as this flag has ground upward. Not a short-term bullish look for Europe. What it does have going for it is that the SMAs 50 & 200 are both sloping upward. Even a hit of the 200 is within the context of the up trend.
China 50 has been an absolute robot in its orderly up trend. The pullbacks have been to the SMA 50 and today, close on the heels of the last one a hard drop to the SMA 50 after a silly gap up is in play. This is a suspect for no other reason than that gap up looks like a classic bull trap. Speaking of which, what about the US Dow & SPX yesterday, eh Bueller? Anyway, it’s a long way down to the firmly up trending SMA 200 if FXI were to lose the 45 area.
EMs? See above.
Sure, the US is drunk on tax cuts for the wealthy and corporations. That’s market friendly… whee! But it is unlikely that the richly valued US market would pull a flying pig routine in the face of a global pullback. So it may worthwhile to watch Europe and two recent global leaders, China (large caps) and EM for indications.
The slow moving big picture plan per yesterday’s post would not be affected (other than the short-term state of it’s 10yr/30yr yield view if risk goes off and bonds get bid) unless a pullback, if it comes, were to start breaking major markers, like the daily SMA 200 and lateral support levels (which we’d manage as needed). This post is not predicting a correction, but it’s giving us one element to watch in support of a case for one. Let’s see how the week ends for global stocks.
NFTRH.com and Biiwii.com
Okay, so the theme is that on the macro 3 events may come together to signal a big climax, leading to change.
Those Amigos are…
- Stocks complete their rise vs. gold.
- 10yr & 30yr yields hit upside targets (and limitation points) around 2.9% & 3.3%, respectively.
- The yield curve finishes flattening (at least) and turns to steepening (at most).
We use the big picture graphic (a bit dated now) for cartoonish illustration purposes. This shows global and US stocks retracing the former bear market vs. gold, the 30yr yield Continuum™ and the yield curve.
Today, let’s take a daily view of stocks vs. gold and update the big pictures of the others.
SPY vs. GLD is taking the next step higher. Referring to the big picture graphic above, this could be the final and terminal launch to the projected resistance area. Warning to all you real time thinkers: the process could move slower than your brain waves. Have patience.
The next Amigo is long-term bond yields. The 10yr held the 50 and 200 day moving averages.
The 30yr is more suspect, but the pattern’s symmetry is still in play.
Here’s the Continuum™, AKA the 30yr bond yield and its 100 month exponential moving average limiter. It continues to flash a bull flag and the pattern above would measure to the limiter around 3.3% if it becomes active.
Here is the daily view of the yield curve. It is burrowing downward, chronically flattening but not yet near inverted.
Here’s the bigger picture view complete with my editorial markups about the bond/yield curve manipulation scheme secretary Mnuchin is cooking up in a ‘me too!’ play to the brilliantly evil Operation Twist that was inflicted upon free markets by the Bernanke Fed in 2011. Here is the post from November 20 in which we highlighted the details of the scheme.
Bottom Line
The 3 Amigos of macro change will ride until they hit the wall known as the limitations of a cooked up macro market backdrop. If – and it’s of course still a question – stocks retrace vs. gold, yields rise and the yield curve flattens toward logical limit points, and these limits come about in confluence, it could be the biggest market signal (of drastic changes) many of us have received in our lifetimes. And I don’t see that as hyperbole.
In the case of yields, the message could be doubly bad because if the limiters fail and yields break the secular bear (bond bull) a debt addled economy would eventually get croaked under inflationary and yield pressures. If yields are limited and turn back down with the other two Amigos, the message would be that deflationary pressure is building because a rising gold/stock ratio indicates risk ‘off’ and liquidity issues and a rising yield curve can have it both ways, under inflationary or deflationary pressure.
Meanwhile, party on Garth because it’s really bullish out there. But for crying out loud, go easy on the punch.
[edit] You may recall my previous metaphorical exercise, the 2 Horsemen, which would be the Gold/Silver ratio and US dollar, riding together to bring an end to market liquidity. They could yet ride together later, after the dollar finishes its newly reinstated bear phase. But the one to keep an eye on is the 1st Horseman, the gold/Silver ratio. We’ll keep him at the ready for the time when the limits shown above are reached. This Horseman rode hard in Q4 2008 and if the coming change is not inflationary, as would be indicated by silver leading gold, he could join the above three. My well honed math skills tell me that makes 4 Horsemen and they wouldn’t be nearly as enjoyable as the happy-go-lucky 3 Amigos.
[edit 2] Lest the reader think it’s a Doom & Gloom piece, please understand that it’s a bullish piece heading one day into a wall of limitations and hence, change… and very likely gloom. But I ask readers not to impose their wants, desires (hey look, who doesn’t desire a meltdown of the construct Bernanke and his monetary cohorts created and Trump and his fiscal cohorts seek to amplify and sustain?) and bias on this. The risk ‘on’ markets are bullish and I for one am aligned that way (as sensibly as I can). Later, when indicators tell us the time is right, something is going to change and that change, as indicated by all the Amigos and Horsemen above, will either be inflationary intensification or deflationary unwind of man-made excesses now interwoven in every corner of the financial markets.
NFTRH.com and Biiwii.com
With some wild action in key markets, what Can Stop Stocks?
The S&P 500 has eclipsed several resistance levels over the last few years, and it is not showing signs of slowing down…
All-time record commercial short positions in crude oil…
……..view Charts and analysis HERE
….also from KingWorld:
For the establishment that enjoys its own privileges, the Double Standard doesn’t exist. For those outside privilege the Double Standard is “in – your – face” and “in – your – wallet ” government. As in suffering endless rules and regulations that Washington’s version of Moscow’s “Nomenklatura” generally ignore. Perhaps it should be described by a term Progressives can understand – “Standards 2.0”.
As history shows, those who impose rules don’t like to follow them.
On the civics side, the value of common law is that it usually prevents predatory governing classes. Lately it has been daunting to insist that various government agencies stop acting in their own interests. This is the political struggle of this century.
At the beginning of the previous century the feature of liberalism was the sanctity of the individual and limited government. Socrates’ “The unexamined life is not worth living” was widely regarded.
Today’s corruption of liberalism insists that good comes from government without limits. This has forced the greatest intrusion into ordinary life in American history. To the point where a recent headline sums up the persuasions of the younger generation: “Millennials think socialism would create a great safe space”. Ancient theorists about democracy could not imagine the new world of “The uncoerced life is not worth living”.
It is not just terms that have been corrupted. Agencies voluntarily formed to ensure law and order have been corrupted. The FBI and DoJ, formerly “of the people”, have become swamp critters.
The integrity of free markets and economic engineering in electricity production has been displaced by the passions of CO2 zealots. Costs of basic electricity in many regions are sky – rocketing. In a bizarre form of Gresham’s Law, bad electrical power has driven out good electrical power. Then the promoters discover that the wind does not blow all the time. So, they are forced to duplicate politically correct power generation with, for example, economical natural gas.
The brilliance of sound money has been corrupted by reckless financial adventurers in central banking. The transfer of wealth to the Deep State through depreciation has been the biggest scam in financial history.
The term “Deep State” is an appropriate description of relentless ambition, now very defensive.
And it won’t quit voluntarily. Thankfully, history provides examples of the senior economy going authoritarian and then being reformed. Through popular uprisings. When the money runs out.
In the Third Century, Rome was corrupted by ambitious bureaucracy into a police state. When confiscatory taxation became inadequate, the state imposed chronic depreciation. The combination of central planning and bureaucratic greed destroyed the Empire’s economy.
Christianity 1 along with the independence of the Northern Provinces 2 helped collapse the Roman Deep State. Ironically, by the 1500s the church had the only organization that could be corrupted by ambitious bureaucracy. The combination of church and state imposed regulatory intrusion, confiscatory taxation and chronic inflation. It ran until the economy was impaired. Serious reform in England began in the early 1600s.
Historians called it the Protestant Reforma tion. Every authoritarian agency and belief was examined and eliminated or reduced. Under the advance of real science, astrology became astronomy; alchemy became chemistry. The corruption of the Church was exposed and reduced. Overall, it should be called a Great Reformation.
Sixteenth Century indulgences provided absolution from sin. Today’s indulgences provide absolution from the “sin” of emitting CO2, which while a trace gas is essential to all, repeat all, life.
Both indulgences were available for only those who could afford them and were integral to bureaucratic corruption.
The other form of absolution from destructive behavior has been the inside loop. Such as the one that enabled and protected Hollywood’s predatory habits. Another offense is the Main Stream Media that never criticizes either the methods or results of the Deep State.
That there is a “thermostat” that will perfectly set the Earth’s temperature is the greatest delusion since the solar system rotated around the Vatican.
Carbon dioxide emissions are, of course, the latest in the concept of “original sin”. In these days, ambition about Biblical morality will not advance an activist’s career. However, the concept that just living is an original sin has been a winner for anyone beguiled by authoritarianism.
Recently, the power of today’s authoritarians seems to be faltering.
Even with out the edition of yet another Star Wars , Hollywood’s force field is collapsing rather quickly.
The very strong El Nino warming of 2016 was a weather event , and is now over. Even before the next Al Nina there is solid evidence for a cooler winter. An Ipsos – MORI survey notes that those who are “Concerned” about “Climate Change” reached 82 percent in 2005 and has declined to 60 percent now.
The popular uprising has not been “put down” in the US and reform is spreading with Brexit to Austria and Czech elections. Saudi Arabia could be starting a reform. In all cases, the struggle is between a corrupt culture and reformers.
In his Death of Liberalism , published in 2012 Emmett Tyrrell reviewed “Liberal – Progressivism”. He wryly observed “A double standard is better than no standard at a ll.”
Criticism of Standards 2.0 has only just started.
Bob Hoye
Institutional Advisors
1 Two important Christian concepts were “Render unto Caesar…….” And free will.
2 Rome had a “top down” legal system. Northerner’s code did not grant exceptional powers to central authority.
- Mark Liebovit’s top recommendation at last year’s World Outlook Financial Conference was Bitcoin Trust @$110 – trades today @ $928 – up 743%
- Jim Dines recommended Canopy Growth @ $13 – trades today @ $19 – up 46%
- James Thorne shockingly recommended Bombardier @ $2.00 – trades today @$3.02 – up 51%
- Ryan Irvine recommended International Road Dynamics @ $2.50 – taken over 3 months later at $4.25 – up 70%
Those are great results but that’s the whole point of inviting some of the top analysts in the English speaking world to the World Outlook Financial Conference for the past 29 years. Obviously past performance is not a guarantee of future success but the results we have achieved over the years have not been by accident. Our analysts have been chosen precisely because they have strong track records.
No, they are not right every time, but their uncanny ability to read the various investment markets while employing proven risk management techniques has clearly raised their probability of success dramatically. Whether you’re interested in stocks, gold, oil, real estate, interest rates or currencies – we bring in the top analysts to the World Outlook Financial Conference to cover them all.
It’s an incredible line-up for Feb 2nd & 3rd, 2018. Martin Armstrong has been called the highest paid financial advisor on the planet. Heck, I’ve called him the top economic forecaster in the world. Let me give you just a couple of examples. At the Outlook in 2013 he correctly predicted the date of the Russian invasion of Ukraine and the accompanying massive outflow of capital that would push the US dollar and stocks higher. More importantly he clearly predicted the rise of the Dow Jones Index through 18,000 and told the audience to buy every dip because the next stop was 23,700. We came within a quarter of a percent of his target this month so I can’t wait to hear what he has to say now.
Mark Leibovit will also be at the 2018 Outlook. Mark has been Timer’s Digest Timer of the Year, Gold Market Timer of the Year and Long Term Timer of the year. While he’s been great in all those areas – my favourite of his forecasts came at the 2014 Conference where he told us to start to invest in marijuana stocks starting with GW Pharmaceuticals at $67. Mark has repeated his recommendation of the marijuana industry every year. I think it’s safe to say that was a good call but I’ll be interested in what he has to say this year as the industry and the stocks become more mainstream.
I won’t go through all the 2018 speakers right now (they’re available HERE) but let me give you just one more example of the quality of analyst featured at the World Outlook Conference. Keystone Financial’s Ryan Irvine has been producing a World Outlook Small Cap Portfolio for the past 8 years – and as I said past performance is no guarantee of future success but I like my chances. The Small Cap Portfolio has returned double digits every single year – no exceptions.
Obviously I want to hear Ryan’s picks at this year’s conference. I’m worried it will cost me too much money if I don’t!
What Will Happen in 2018
The easiest prediction is that the rate of change will continue to increase, which will produce big price swings in a variety of investments.
Goldman Sachs just predicted four more interest rate hikes in the States in 2018. If they’re right, it will have a huge impact on the US dollar. The loonie will go down as a result unless the Bank of Canada raises our rates with them. And if they do what will be the impact on real estate and Canadian stocks?
Currency moves are going to provide a huge opportunity for those who position themselves properly. I’m pleased to say that the currency recommendations at the Outlook Conference have made a lot of people money but I think 2018 will be an even bigger year.
I continue to be most worried about the government bond market. If rates rise, bonds will certainly go down, which is why I’ve been telling people to get rid of government bonds with maturities of 3 years and longer. At the 2018 Outlook we’ll talk a lot more about the vulnerability of government bonds.
The Pension crisis in Europe and the States will also be a big story in 2018 with major financial implications, as well as social and political ones. We’ll talk more about how to position yourself to both protect and profit from the pension problems.
The Bottom Line
The level of volatility and the violence of the moves in all markets necessitates taking advantage of the best possible research and analysis available. While financial programs and conferences often feature cheerleaders for a variety of products or industries, we focus on top flight independent analysis. The bottom line is that I am confident that our analysts can make you back the price of admission many times over.
Periods of historic change provide incredible opportunities and incredible danger.
At the 2018 World Outlook Financial Conference and on MoneyTalks, I’m trying to help you avoid the danger and take advantage of the opportunities.
I hope to see you there.
Sincerely
Mike
PS – The 2018 World Outlook Conference is Friday night Feb 2nd and Saturday Feb 3rd at the Westin Bayshore in Vancouver. For tickets and other details go to www.moneytalks.net and click on the events button.
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A sane voice in a scrambled investment world.
~ Ed R.
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