Casino open for business after renovations...

Move along, nothing further to see from the dark side.  Casino's open for business and they're really on a roll over at the junk bond table.  Above the noted resistance it's gonna get really obnoxious to the bull side on broad markets. 

Sentiment goes bi-polar from bearish to bullish and back again as the market goes through its hyper driven convulsions.  Bulls are in control... for now.

http://www.biiwii.blogspot.com
http://www.biiwii.com

S&P 500 pings an important parameter

NFTRH Subscribers:  Per Monday's update, here we are.  Please review the possibilities from here and be prepared for either scenario.  We are smack dab on the pivot.

General readers:  The chart is pretty self explanatory.  SPX is at the downward sloping 50 day moving average. 

http://www.biiwii.blogspot.com
http://www.biiwii.com

Big daddy weighs in (Gold-Silver Ratio)

As if its ears were burning, the daddy of liquidity indicators weighs in and says that if gold (GLD & SLV proxies used here because stockcharts.com no longer supports daily candle sticks for commodities) breaks current resistance vs. silver, things are gonna get a whole new shade of ugly.

Yet GSR is very short term over bought by the highly sensitive CCI.  MACD on the other hand looks stellar.  Implication?  I guess bulls can play for a little while longer but ultimately if the 200 day moving average is exceeded, the 5 level is immediately loaded, with 5.75 doable as well.

Okay dear blog readers, I am going to be light on the posting for the balance of the week.  It's summer and even geeky bloggers need to lighten up once in a while and have fun.  At least that is what the powers that be are telling me, and I'd better listen.


http://www.biiwii.blogspot.com
http://www.biiwii.com

VIX Upated

Yet this chart still looks good as well, which would not be good for stocks.  VIX maintains moving average support off of potential bottom.

http://www.biiwii.blogspot.com
http://www.biiwii.com

30 Year Yield

Last week it was noted that there was a bullish divergence on long term Treasury yields at support; therefore there is a hidden bullish divergence on stocks and other assets.  While the yield proves nothing as long as it resides under the 50 and 200 day moving averages, it remains constructive for a rise in the short term.

http://www.biiwii.blogspot.com
http://www.biiwii.com

This is why I hate political risk...

After years of holding Metallica Resources (now part of New Gold, NGD) and dealing with Cerro San Pedro (I think that was the name of the Mexican gold & silver property) protests, it was ultimately cashed in on the order of a 600% gain. And I still am not sure it was worth the aggravation.  :-(

Some really smart people like Bear Creek, owner of a prime silver property and a value, price wise. Being a control freak, I am uncomfortable with other people in control of my monetary destiny. Which, when I think about it, is probably where the website and blog came from.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Copper

Okay, so how accurate is this accumulation indicator in the bottom panel, anyway?

http://www.biiwii.blogspot.com
http://www.biiwii.com

GDXJ-GDX Ratio still degrading...

This one didn't make it into NFTRH142, so here it is now. Theoretically, it is a leading indicator for the precious metals stocks and in dropping below the MA 200, it cannot be read as anything other than sucking. Taken with the balance of data we have been following, the argument is for the real buying opportunity still laying somewhere down the road.

http://www.biiwii.blogspot.com
http://www.biiwii.com

NDX bear flag or short term bottom?

We'll know soon, with the first hint being a rise above the EMA 20, then later the 50.  But it is cool how the daily up candles seem to be in lock step.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Silver proxy SLV

You know, silver enthusiasts already don't like what I have to say a lot of the time.  This post may prompt the Silver Bugs Union Local 100 to revoke my permit for public precious metals commentary.

All I do is read the charts, and this chart says that if SLV loses its MA 200 and that neck line, the downside is going to be perhaps even worse than my current 'worst case', which is a hell of a lot lower than the actual 'initial' target, which for SLV, equates to around 28 and change.  So, in hitting the expected initial target, SLV had better then turn and burn into a rally to negate the neck line or Silver bugs - and likely the commodity and greater asset market spectrum are going to get hot under the collar this summer.

http://www.biiwii.blogspot.com
http://www.biiwii.com

From a long term NFTRH subscriber...

I need to market my premium service here on the blog, and there is no better way to do it than through the words of actual customers.  This is snipped from an email last week, with Monica's permission.

"Before I go on, I want to add one thing (of many!) that I appreciate about you so much.  Almost everything I read in the Gold community, or indeed so much of the current discussions on anything in the media or on the internet, is fear-based.  [Revving] up the fear, getting the adrenaline pumping, amping things up to get someone to act out of fear.

You are so valuable because you don't do that.  You assess, present possible scenarios, discuss your reasoning, provide charts.  You don't view everything through a narrow political agenda, of either end of the spectrum, and you don't attempt to sell something by scaring the bejeezus out of me. 

So, thank you!"  --Monica D

http://www.biiwii.blogspot.com
http://www.biiwii.com

Dow-Gold Ratio spawns a screed

As if anyone needs to be reminded, the question of whether or not a cyclical bull remains in progress for stocks - and this is still very much in question my friends - is secondary.

The chart of the Dow as measured in gold (as opposed to Federal Reserve debt notes) continues to put the lie to any narrative that thinks it can preach about the value of stocks, at least in relation to things of actual value.

Abbey Cohen's "US stock market right now is priced about 15% below where it should be" and the various 'stocks for the long run' crazies out there come to mind.  This is a chart that shows the 'stock & trade' of a formerly great nation down trending for a decade now, as the US desperately tries to meet each new challenge with renewed inflation attempts.  It's actually kind of sad, really.

I'd expect this down slope to remain in place until we change our ways on a mass fundamental level in the public's awareness and education, which would eventually demand change in official policy.  It could be a long wait.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Like me?

Well, I have been dragged kicking and screaming into the social networking era.  First the Twitter button, and now the dreaded Facebook 'Like' up above.

They tell me 'hey geek, will ya get yer head out of the charts for long enough to do what a hip - not so young - professional needs to do these days stay above the noise?'

I say okay, and I shimmy on over to the dark side a little bit more.  Incrementally improving internet marketing savvy aside, I am still me... I think.  What I know is that I offer a high quality market newsletter and a pretty good blog to boot.

So, will you like me?

http://www.biiwii.blogspot.com
http://www.biiwii.com

NFTRH142 Out Now...

NFTRH142 snippet:

"This chart explains that a case could be made for any sector washout taking the GLDX to
12.50. It is also an opportunity to bludgeon you again with words about keeping cash for
opportunity. Do you remember the movie called Jacob’s Ladder? In it, Danny Aiello
told poor, tormented Tim Robbins “So, if you're frightened... and you're holding on,
you'll see devils tearing your life away. But if you've made your peace, then the devils are
really angels, freeing you…”

The devils are the perceived evil forces of manipulation that much of the gold community
fears. The angels are your ability to keep cash and play the game on its own terms."

There is a lot more in this week's report.  You should check it out.  ;-)

http://www.biiwii.blogspot.com
http://www.biiwii.com

Gold & Silver CoT reports

http://www.biiwii.blogspot.com
http://www.biiwii.com

Bullish divergence on 30 year bond yield

Bullish divergence at support for the yield could be a hidden bullish divergence for stocks, commodities & precious metals.  Hey, I don't invent 'em, I just write what I see in 'em.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Uncle Buck: DOA? Hardly...

One wonders to what point USD will have to rise for policy makers to blink... into the much ballyhooed QE3?  Tuning out the hysteria, the simple daily chart says this...

Bullish falling wedge into a bottoming pattern of some kind, breakout of wedge, MACD 0+ and a new daily uptrend by AROON.  It is time to begin to target upside termination for future reference.

Survey says... let's manage the 38% retrace to around 79 for now.

For fun, try to reconcile the hysteria in the previous post with this chart.


http://www.biiwii.blogspot.com
http://www.biiwii.com

Goldbug Headlines...

Actual headlines from a popular internet site.  Don't take this the wrong way, because I highly respect a couple of the names below.  But if you think this is bullish... think again.

Rick Rule - Silver Will Trade Like an Internet Stock to the Upside


Turk - Gold & Silver Have Bottomed, Summer explosion Ahead


Embry - System Wide Meltdown as US to Enter Hyperinflation


Eric Sprott - We're Headed off a Cliff, be Wary of Paper Assets


Hathaway Confirms Gold to Trade in the 5 Digits


Jim Sinclair - Gold to Exceed $12,500 to Balance US Debt

The problem with deep thinkers in the gold 'community' is that their subject matter is very dynamic and usually flat out scary.  So how does one get one's deep thoughts out to the greater world in an organized and strategic way so as to minimize stirring the herd up and getting their emotions all in an uproar (and panties in a bunch)?  Answer, it's impossible.  These sites get a lot of traffic and new gold bugs - complete with new Gold 101 manuals from which they read and lecture - are minted every day.

It's just that in its interim swings, the markets sometimes fail to get and play by the memo.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Small caps filling gap

And also making me go 'hmmmmmm'... as in hmmmm, should I stay short? Cash is best risk management he said.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Goldcorp above its own neck line

I don't own it, but the chart makes me go 'hmmmmmm'.... nice test thus far.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Huey

Bullish MACD divergence on HUI as well.  Also, it's tested and stayed over the neckline NFTRH has been managing.  Don't let anyone tell you that's a bullish hammer, however. A classic hammer candle comes at the end of a down trend.  This one is at the high end of a 2 day relief burst, which is all we can call this thus far.  Makes no never mind to me. I am holding and improving the core of holdings ever so sloooowly for that day when QE3, by whatever name it goes at the time, comes to be.

http://www.biiwii.blogspot.com
http://www.biiwii.com

First Majestic Silver...

AG sporting a bit of bullish divergence.  Whatever, I am holding my recent buy and wish to add if we get a real woogly summer. And some think I bash silver.  I love silver, at the right price.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Equity Put/Call ratio

Here is what happens when Abby Cohen cheer leads into the Fed's scheduled expectations management meeting. The herd snaps bullish (note spike decline in the CPCE) as Abby Jo says SPX is 15% under valued, and there's the Bernank on the horizon to save the day. Problem being, the Bernanke apparently has not finished managing the inflation expectations out of the unwashed masses just yet.

Well, it could be time to get bullish sometime fairly soon, but it most certainly was not yesterday. The CPCE's EMA 10 (lower panel) does a better job of smoothing out the knee jerk reactions and could climb to the 1.00 range before a lasting rally happens.

http://www.biiwii.blogspot.com
http://www.biiwii.com

NFTRH email update sent yesterday, pre-Fed

As expected, over sold technicals and over bearish sentiment (and some Greek bailout blather) have led to a burst of joy.

Note that the 50 day moving averages (in many cases now sloped down) have been approached or hit in markets ranging from the precious metals to US broads.  If the relief rally is going to fail, it should do so at or around the 50.  If the less favored scenario were to unfold, with MA 50's being surmounted and held, then the door opens up to a retest of the cyclical bull market highs.

If one is bearish for the intermediate term, some selling, profit taking and/or risk management is sensible now.

As noted on the blog on Monday, I reduced bear positions significantly.  Today I am adding some back with an increase in the XXX high yield bear fund and a buy back of Ultrashort xxxxx xxxx (XXX) to go with the still-held XXXX.  Please remember, I never suggest leveraged bear positions [for most people] because fighting policy makers is a rough way to go for most people.  Cash is a good way to go because it will be safe, sound and ready for deployment in favored assets as needed.

I am also going to consider profit taking on a couple of items.  As an example, xxx, which was highlighted as a 'bottom feeder' buy a few weeks ago, has finally rebounded hard up to the MA 50.  

I am generally using this time to continue upgrading the quality of core holdings, take profits and manage risk.

The big picture is fundamentally sound for the gold sector, and I plan to remain in alignment with that view until such time as it changes.

Regards,

Gary

One bear I reestablished yesterday after the update was to be long the VIX.  This time using the inefficient yet a bit less volatile (than call options) VIXY.  It is easier for me to hold bear positions when I think of them as insurance.  I would never claim to be a bear hero. 

BTW, some people I very much respect are calling for the relief rally to extend for a few weeks.  My technicals told me to establish insurance on yesterday's euphoria.  We'll see how it works out.

http://www.biiwii.blogspot.com

http://www.biiwii.com

Don't be the herd...

The herd is going to believe this:  World Stocks Slip on Fed Remarks About US Economy

BANGKOK (AP) — World stocks markets followed Wall Street down Thursday after the Federal Reserve admitted to being caught off guard by recent signs of deterioration in the U.S. economy.... Comments by Fed Chairman Ben Bernanke, who said at a press conference in Washington that some of the problems plaguing the U.S. economy "may be stronger and more persistent than we thought," turned investors away from stocks, analysts said.

People who want to survive and thrive on the other hand, are going to take this with a huge chunk of salt that is the realization that policy makers have needed to tamp things down after long term Treasury yields threatened to blow the whole gig.  This becomes so transparent when you know how to look at it.

New buyers for T bonds are needed in the near term, right Beuller?

http://www.biiwii.blogspot.com
http://www.biiwii.com

30 year yield monthly view (testing 1... 2... 3...)

Trying the uploader to see if we are back in business.  Why not post the 2nd most important chart in the financial world?  The Wizard appears to have continued leeway to reload the inflation gun...

http://www.biiwii.blogspot.com
http://www.biiwii.com

Ah good, it works!

Feedback from an NFTRH subscriber...

"Hi Gary,

Great update, thanks!  [me: A brief market update went out today pre-Fed] And my own answer:  No, this punk is Not feeling lucky.  ;)

So, the reason I'm writing is in response to your "Spontaneous NFTRH Promo..." post.  I was about to put something on your blog but wanted to bounce this off you first, as I'm not sure if it would look cheesy giving you + feedback there.  Bottom line, I want to give you positive feedback but I want to do it the best way and I'm not sure what that is.

I wanted to say that, "since August 2007 I have been searching for someone who can both sift through the bullshit AND invest accordingly.  From both a profit perspective and my own moral perspective I wanted to find one who could see the world and market for what it is.  I can't tell you how many out there can do the former but not do the latter, and vice verse.

I first saw some of your work on Seeking Alpha and then I think Tim Knight mentioned you a few times - as he is always looking for an opportunity to be contrarian your PM stance, lol!  [me:  I think Tim Knight sometimes references a different gold bug 'Gary', or maybe it was me... not sure] At any rate, my mental notes finally pointed me to your blog.  I found some excellent analysis that was both real and surprisingly contrarian to popular market thinking, even contrarian to what I thought was 'smart' market thinking.  I signed up in Jan. '11 (finally) and immediately started to grow my capital and then, importantly, preserve that capital!  I haven't found anyone who has the patience you have, nor the ability to sift through the tea leaves as you can.  I've found a consummate professional here in the Rabbit Hole and am happy to say I'm done shopping around."

Honestly, I'm not gushing, just calling it as I see it. You are welcome to use this, in whole or parts, in any way you see fit and/or I am happy to post this myself on your blog.
Regards,

Dave (a.k.a. Shell Game on your blog)"

In other words... zzzzzzzz

To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent.  The Committee continues to anticipate that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate for an extended period.  The Committee will complete its purchases of $600 billion of longer-term Treasury securities by the end of this month and will maintain its existing policy of reinvesting principal payments from its securities holdings.  The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate. 

The Committee will monitor the economic outlook and financial developments and will act as needed to best foster maximum employment and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.

Good Cops, Bad Cops

S&P 500 weekly chart

So, is this a green arrow event or a red arrow event?  Do ya feel lucky punk?  Well DO ya?

Edit (12:25)  Had to fake out the Blogger image uploader to get this posted.

http://www.biiwii.blogspot.com/
http://www.biiwii.com/

Spontaneous NFTRH Promo...

Blogger's image uploader is on the fritz, and to a chart guy that can be err, kind of bad.  I had a weekly chart of the S&P 500 ready to go with a theme that questioned the nature of the most recent failure of  the weekly EMA 20; in other words, is it a healthy dump prior to bull resumption or one that signals a major bear trend.  I'll get to it when blogger stops malfunctioning.

Anyway, isn't it about time we had a casual conversation, you and me?  Sure it is.  You are a dear visitor and I am a financial blogger, I guess.  But that term sounds so lame because anybody with an opinion can pop up a blog and make like someone worth listening to.

I have had my share of wrong way leanings but as was the case last summer with the gold-silver ratio reversal, the key is in the identification of actionable trends and then being among the first onto them; not in boldly making predictions left and right and then vigorously touting the good calls.

Here we will be more mature, and we will have a higher level of respect for ourselves than the broad casino that passes for financial markets and associated media.  Nobody has a crystal ball, but everybody should have a set of tools that keep them safe and sound on the right course.  This is especially important at a time like now, with over sold, over bearish markets on the rebound and some important price manipulators behind closed doors about to pretend to control things.

I feel my talent is in cutting through the bullshit to a sufficient degree to always keep my eye on the ball to be ready for whatever presents itself in this wild environment.  Subscribers will note that NFTRH analysis has thoroughly prepared us for this moment, even as we deal with the lack of definitive answers from a crystal ball.  Capital preservation as appropriate, and also being brave (and bullish) as appropriate.

Macro fundamentals, nominal technicals, intermarket ratio technicals and some deeply held beliefs regarding the big picture come together the help NFTRH subscribers manage the intermediate swings that provide these opportunities to preserve and deploy capital.  If you feel at all confused right now, you might think about a subscription because while I think this is a high quality blog, much of the picture is purposely left out, for obvious reasons.

You can check out NFTRH here:  http://www.biiwii.com/NFTRH/subscribe.htm

Now, let me go see if that uploader is working yet.  ;-)

Gold-Silver Ratio (GSR) argues that bull relief may be brief

This is the GSR chart first introduced 21 weeks ago in NFTRH120 and reviewed routinely since.  It showed the breakdown from the would-be inverted H&S, which ignited the huge bull trade late last summer.  It was at that breakdown point that NFTRH dropped the caution stance and went unhedged bull.

We then followed week after week of relentless declines in the GSR (noted by the cluster of blue ovals), in an attempt to be Johnny on the spot for the moment the backdrop changed.

Of course, there were the 'bad cops' Plosser, Fisher and Bullard to deal with.  There was the 100 month EMA on the 30 year bond yield in danger of breaking and a host of other data points, not least of which was over confident sentiment by dumb money like individual investors, newsletter writers and NAAIM investment managers.

Well, the dumb money is now bearish so the market is indicated to have an important piece in place for some kind of rebound.  But the GSR, among several other things I am looking at - like nominal technicals - tell me this rebound might only be enough to reset sentiment a bit before continued declines across asset markets.  Lyin' Larry's pumping, the Fed is sure to offer a few breadcrumbs this week and the relentless bearishness may get a mini break.

GSR however, rose impulsively from the red oval and persists just below thick resistance.  The pumpers have not been able to QE3 the GSR back to the perceived hell it came from.  Really though, the GSR is just a reflection of the system's most recent honest attempt to cleanse itself of the toxins routinely injected by policy makers.

Stay tuned.

Edit (A couple minutes after posting):  This is too funny:  'European Stocks Rebound on Greek Bailout Optimism'.  Yesterday on the blog:  "The broad asset spectrum probably needs a bounce with the Greek 'will they or won't they?' b/s serving as an excuse"

http://www.biiwii.blogspot.com
http://www.biiwii.com

Apple: Great company with a lousy chart...

The minute I could figure out how to perform purely on a Mac the last of the functions I had been using Windows for on a partition, I cleaned that Microsoft garbage off the Mac.  I will never buy a PC again, ever. 

That said, AAPL does not look so good as it builds a tough looking ceiling.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Risk reduced...

Risk is reduced in the gold stocks and I think I am going to take profits on most remaining bear positions and manage risk through cash %.  The broad asset spectrum probably needs a bounce with the Greek 'will they or won't they?' b/s serving as an excuse.  This is all sentiment and technical support level stuff.

Edit (11:40)  There, sizable bear chunks gone against Euro (EUO) and Oil & Gas (DUG).  The options stuff was small.  Cannot take it lightly when these crooks give you profits on the short side.


http://www.biiwii.blogspot.com
http://www.biiwii.com

Bullish Divergence on GDX 60 min. chart

Say, could this lead to a bounce?  Bullish divergence by MACD and RSI will need a bump over the EMA 30 and RSI 50 to get actualized.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Dropping some options...

Selling options exposure on the Jaws of Death (JNK puts & VIX calls for +45% and 28% respectively).  Not bad for insurance.  Keeping bear exposure on junk bonds via the much more sedate SJB.

http://www.biiwii.blogspot.com
http://www.biiwii.com

FXI-SPY ratio & its implication

China is a leader, SPX a laggard.  The ratio usually leads the SPX by several months and now it appears the broad US market is finally getting in line w/ FXI-SPY.  The implication of the chart however, is that this will not be Armageddon '08 or anything like it.  And when you read what Leapin' Larry is putting out in the media, you can kind of see why. 

It will eventually be "inflation all the way, baby" in the words of the dear departed (from this blog's 'Gold This Morning' post) Jonathan.

http://www.biiwii.blogspot.com
http://www.biiwii.com

NFTRH141 Out Now

Actually, it came out much earlier, but upon getting it mailed out I had to get out and do a lot of dumb work outside, like shoveling mulch.  I love doing dumb work, it's therapeutic.  I will promo #141 with the words of my friends Larry and Mark:

Edit (4:52)  It occurs to me that the term 'dumb work' could be construed as the elitist words of a real a-hole.  It's not how I meant it, however.  Any work that is honestly done is good work in my book.  I love shoveling mulch.  :-)

L:  Brilliant Again [well, his words not mine; just doing my job] Love charts pages 12-14.  Love anecdote on you vs. PH.  You go dude.

M:  Re: Money Supply & Inflation (& a mini screed)  That was superb, one of the best pieces i've seen written on how the unfolding macro ties in with personal money decisions...not just by you but by anyone. I've always found it difficult to write that type of piece, because the line between financial sanity and the tinfoilhat mob is very fine. Easy to fall off the tightrope, but you did it so well. Feel good about that section and i'd love to see you put it up on your blog later in the week to get a wider audience to it.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Busy Yield Curve chart coming at ya... again

Okay, so the most recent peak in the yield curve sure enough brought on an impulsive up move in the gold-silver ratio.  Okay, the world is still intact... sort of.  So now the question is, what is the most recent spike in the curve going to bring on?

I can think of some candidates for answers that may be realized over the coming few months:

• A break through resistance by the GSR

• Dislocation in broad markets

• Some good old fashioned and bald faced inflation panic policy, austerity movement be damned

• An Utter ramp in gold and gold stocks (nothing like a panic to propel this sector)

• An eventual break of the upper boundry (monthly EMA 100)  on of the T bond yield 'continuum'

Or something like that.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Uncle Buck... weekly view

Here is a weekly chart of the US 'currency', holder of the confidence of and in a proud nation.  I'd say 76-78 is pretty important, eh Beuller?


http://www.biiwii.blogspot.com
http://www.biiwii.com

Definition of Insanity?

Larry Summers by way of Bob Hoye:

"The central irony of a financial crisis is that while it is caused by too much confidence, borrowing and lending, and spending, it is only resolved by borrowing and lending and spending."  --Financial Times, June 13


Utter stupidity from a person of power, influence and wealth (gathered disseminating this type of crazy talk).  But then again, going opposite Larry has kept me in very fine position every step of the way out of Armageddon '08.

SPX 60 minute chart

Initial downside target was 1250 at around the 200 day moving average and the March lows... check.  Market can rally for a while, especially given the sentiment backdrop.  Why not use pathetic Greek situation as ignition? 

http://www.biiwii.blogspot.com
http://www.biiwii.com

Gold stocks vs. SPX - Big picture

Periodically, angst crops up in the gold sector with worker bee gold bugs decrying the evil forces of manipulation and calling for the heads of the bull captains who keep ordering the troops up Hamburger Hill, only to be mowed down over and over.

It's the way the gold sector works.  Swallow and digest ideology and then go get mowed down.  Then get pissed off and in the worst case, sell out and swear off the sector and the charlatans that promote it, right before the next head spinning rally.  It's good fun.

Monthly HUI-SPX shows how long the latest consolidation (of gold stock dreams vs. broad markets) has been in effect (since early 2009).  The ratio appears to be readying for some kind of gold bug washout as it did in '03 to '05, '06 to '07 and again, dramatically in 2008.  With all these shakeouts along the way, the thing has managed to go from .0263 in 2000 to .39 this morning. That's kind of a good gain for patient people, wouldn't you say?

As recently as February, it was impossible (for me anyway) to tell whether a gold stock selling or buying opportunity was coming.  That is because (primarily but not exclusively) the yield on the 30 year bond had reached but not definitively pierced the upper boundary of the 'continuum'.  The answer came and caught precious metals, commodity and ultimately stock bulls off sides and here we are today; potential deflation scare upcoming if all is to remain nice and 'normal'.

I am not going to continually go over the reasons why the gold sector is entering 'buying op' mode.  It's a free blog after all.  But for those that are ready, the misperceptions game is working for them, as opposed to against them, as for the majority.  We have downside targets and the key is to keep mental balance... and cash.

This ultimately includes all major markets and market themes.  But again, the gold sector is the first mover and the prime fundamental beneficiary of what is in play now.  Many will become angry and frustrated.  I will just manage risk, have patience and take the payoff compliments of emotional people when the time is right.

Edit (9:44)  Very worthwhile link to KWN interviewing Mr. Gold, Jim Sinclair.  Yes, he is one of the gold captains - probably THE gold captain of captains - alluded to above.  But his heart is in the right place.  This stuff is all true, but it is incumbent upon the individual gold herd members to navigate through the mine field effectively.  No radio sound bites, financial websites or even smart alec bloggers are gonna get the job done for the individual in a 1-size-fits-all manner.

http://www.biiwii.blogspot.com
http://www.biiwii.com

3 signs all not well despite today's rally attempt...

http://www.biiwii.blogspot.com
http://www.biiwii.com

Royal Gold still in play

Will it or won't it hold support?  An important question and an important upcoming answer for the gold sector.  I am and have been generally sitting on my hands awaiting answers.  Long the best gold prospects I can find and short the stuff I think stands to do more poorly after the goldies stop leading the markets down.

http://www.biiwii.blogspot.com
http://www.biiwii.com

2011 Stanley Cup Champions!

Photo from bruins.nhl.com

B's join the Sox, Pats & Celts in the penthouse.  Older guys teaching younger guys how to be, coach moving forward no matter that bile directed at him week after week and a team that cares for each other and skated through brick walls for each other.  Awesome!

Disclaimer:  I am Boston born and raised, but due to some quirk of nature I am a Ranger fan from boyhood.  It took me many years to accept the Bruins after the Cup win over the Rangers in 1972.  This year, seeing what a class act the B's are, it was easy to adopt them for a great playoff run after the Rangers got booted.

VIX waking up...

and the calls bought last week are doing their job as volatility insurance.  Maybe the pig's failure to follow up yesterday's rally is waking up some sleepy heads.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Nominal Gold & Gold vs. Currency, Commodities & Stock Market

Excerpted from the June 12 edition of Notes From the Rabbit Hole (NFTRH140):


Nominal Gold & Gold vs. Currency

Despite the pervasive bearishness in broad markets as well as the gold sector, gold
remains too far above its weekly EMA 30. It is due for a correction, all the way down to
the low to mid 1400’s (written sarcastically). This would be in keeping with the lovely
and orderly MACD consolidation highlighted in yellow.

Gold in various currencies is in various shades of bullish. That is because we are, in slow
motion, watching these paper promises fail to store any value whatsoever as governments
routinely do to their paper whatever is needed for political expediency. Governments
keep telling their citizens that they care about and support their respective currencies as a
way of maintaining confidence, diminishing though it is. Gold is the only commonly
accepted monetary refuge from the ongoing abuse of the various debt notes of the world.

Gold vs. Commodities & Stock Market

Above is of course, a variation of our most important chart for the gold mining
fundamental case. Gold-CCI maintains a break above resistance (now support), and gold
has broken trend lines in oil, industrial metals and the S&P 500. In fact, the weekly
AROON oscillator (not shown) has gone positive on gold in relation to all markets noted
above except crude oil. Gold is now in a weekly uptrend vs. commodities, therefore,
gold mining fundamentals are in an uptrend.

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http://www.biiwii.com

S&P 500 relief...

Only if SPX gets above the noted resistance will it have proved something.  Downward sloping 50 day moving average argues it will not. 

http://www.biiwii.blogspot.com
http://www.biiwii.com

Silver proxy SLV from a daily (log scale) view

I worked up this daily chart in the comments section of the weekly view posted below.  *** Hey, why not sign up for Disqus and comment?  I require sign up because there are some freaks out there that like to post crazy things anonymously (I get a record of IP addresses), but it is easy and non intrusive.  I know many blog readers are people who's opinions I greatly respect, and I'd love to hear more of 'em.

Anyway, I have added some panel indicators to the log chart and theorized a neck line of an H&S-like object.  Interesting how the neckline intersects the 200 day moving average and the next preferred weekly target.

Confluence is a good thing in markets because the more data points you can get to indicate an outcome, the better.  So, while a reader put up a nice chart showing SLV holding a trend line, I am going to lean toward it breaking and flushing out some hangers on before any kind of strong rally activity can be expected.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Equity Put/Call Ratio - Trend change

Unlike the sleepy VIX, the CPCE has long since signaled a change in the broad market's character.  From 19 weeks ago in NFTRH121 comes this chart we began using as a way to start the countdown to the end of the cyclical bull market.

To be clear, I did not - and do not now necessarily - think that the spiky change here (to up trending) must be signaling an imminent end to the bull.  In fact, if CPCE had done the same as it did in the run up to the end of the last cycle, it would have taken the better part of 2 years for the market to crack.  Still, there was and is no guarantee that today's inflated market will take so long to unravel as it did back then. 

In summary, CPCE has ground out a trend change and thus the markets are on notice for change of the bearish kind.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Silver still in no man's land...

And not yet down to preferred target, let alone the nightmare target ALL the way down at 20.  Written with sarcasm, because casino patrons would've given their right arm for 20 bucks not too long ago.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Au vs. Aussie...

Rummaging through some stored NFTRH charts we find gold vs. the Aussie 'commodity' currency breaking out. Just one of many ratio charts with important implications.

http://www.biiwii.blogspot.com
http://www.biiwii.com

NFTRH140 Out Now

Well on plan is what we are.

NFTRH140 Out Now.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Gold & Silver CoTs hot off the presses...

GOLD - COMMODITY EXCHANGE INC.                                       Code-088691
OPTION AND FUTURES COMBINED POSITIONS AS OF 06/07/11          |
--------------------------------------------------------------| NONREPORTABLE
      NON-COMMERCIAL      |   COMMERCIAL    |      TOTAL      |   POSITIONS
--------------------------|-----------------|-----------------|-----------------
  Long  | Short  |Spreads |  Long  | Short  |  Long  | Short  |  Long  | Short
--------------------------------------------------------------------------------
(CONTRACTS OF 100 TROY OUNCES)                       OPEN INTEREST:      730,025
COMMITMENTS
 265,739   34,446  153,464  233,997  515,402  653,200  703,312   76,825   26,714

CHANGES FROM 05/31/11 (CHANGE IN OPEN INTEREST:     14,168)
   4,246   -4,064    8,124    1,942   10,164   14,312   14,224     -144      -56

PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADER
    36.4      4.7     21.0     32.1     70.6     89.5     96.3     10.5      3.7

NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS:      378)

239       66      126       51       54      326      212 

SILVER - COMMODITY EXCHANGE INC.                                     Code-084691
OPTION AND FUTURES COMBINED POSITIONS AS OF 06/07/11          |
--------------------------------------------------------------| NONREPORTABLE
      NON-COMMERCIAL      |   COMMERCIAL    |      TOTAL      |   POSITIONS
--------------------------|-----------------|-----------------|-----------------
  Long  | Short  |Spreads |  Long  | Short  |  Long  | Short  |  Long  | Short
--------------------------------------------------------------------------------
(CONTRACTS OF 5,000 TROY OUNCES)                     OPEN INTEREST:      186,987
COMMITMENTS
  29,619    6,270   71,800   52,553   93,481  153,972  171,550   33,015   15,437

CHANGES FROM 05/31/11 (CHANGE IN OPEN INTEREST:       -314)
    -687        4      -56    1,281      -20      538      -72     -852     -242

PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADER
    15.8      3.4     38.4     28.1     50.0     82.3     91.7     17.7      8.3

NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS:      201)
     101       35       88       42       48      175      148

Where's the volatility?

Not in the VIX, that's for sure.  Still, I just added a few calls on the VIX as insurance against what is sure to be a volatile summer.  I do not think it is an overly bullish thing that the VIX is still sleeping.  That is because the implication is that the average investor is still sleeping.

http://www.biiwii.blogspot.com
http://www.biiwii.com

B2: Cream rising to the surface

Some NFTRH core holdings, like BTO.TO (most recent buy op highlighted by email update @ the May low) are up today.  6.25% for B2, others are strong as well.  It's pretty cool.  Of course, we gold stock traders have been getting whipsawed for months now.  Comes with the territory on the way to opportunity.

May 12th:  Classy young gold miner with proven management and a long up-trending chart.  All that the pain of the last few weeks has done is drive BTO.to/BGLPF down to support, within the channel.  It can drift a bit lower and still remain 'normal', but B2 fits the profile of a company that stands to benefit by the expected rise in the 'real' price of gold.  In fact, this dynamic puts the junior to smaller intermediate gold producers squarely in my favored niche for the times. 


But these items should be bought right, not chased.  The herd is not going to rationally compute what makes sense and what does not.  The herd is going to sell things indiscriminately and with a warped sense of what inflation actually is.  Inflation will be happening once again when most are convinced that a double dip recession or worse are all but a given.


Back to the chart, look for weekly RSI around 50.  For my purposes, I am going to add a small amount to the existing position today to get BTO up to speed weighting-wise.

This chart accompanied the update:

http://www.biiwii.blogspot.com
http://www.biiwii.com