At least that is the spin coming out of some of the talking heads today who are crying up a decent U.S. retail sales number as proof positive that the U.S. economy is not in that bad of a shape. When you add to that more short covering in the crude oil coming on the heels of that suspicious WSJ story about potential OPEC production cuts, the safe havens are all being jettisoned today as the “Let’s get back to RISK” sentiment is dominating. Heck, even the US Dollar is higher today after getting a beating this week. From what I can see however, the volume on these moves today is small by comparison to what we have been seeing this week. T...
The gold miners’ stocks are rocketing higher again, multiplying wealth for smart contrarian traders who bought them low in recent months. But after such a blistering surge, traders are naturally wondering how much farther gold stocks can run. Is it time to realize gains, or buy aggressively for greater gains to come? This critical question can be answered by looking at fundamentally-derived gold-stock price targets. Many analysts shy away from offering price targets, with good reason. Divining precise future outcomes in volatile markets is all but impossible. Prevailing stock prices result from the chaotic interplay between sentimental,...
Silver prices are bullish above the February 2 low of $15.11, and I anticipate that trend following traders are likely to use a pullback to the $15.48 mark (yesterdays’ breakout level) as an opportunity to add to their bullish exposure. We note that silver prices have been rallying strongly over the last two weeks, from a low of $14.18 to $15.97. This makes the trend overbought, however, the last few days prove that it’s far better to stick to the trend rather than trying to fight it. A bounce from $15.48 may mark a resumption of the bullish trend and take price to the current weekly high of $15.97. The next target beyond...
We have seen the bottom in the gold market and gold stocks. Evidence: Examine the 30+ year chart of the monthly XAU (gold stock Index) to Gold ratio. You can see that the downtrend in the ratio has lasted about 20 years – since 1996.The ratio is now at all-time lows in the form of a contracting triangle.The triangle has been broken to the upside. In the last 20 years gold has moved upward from under $300 to $1,100 per ounce yet the XAU index has not kept pace, as shown by the ratio dropping from about 0.35 down to 0.03. Gold hit a multi-year low in December at about $1,045. As of February 11, about 1.5 months later gold prices have ral...
The SPY is ~90 pts below intrinsic value…. “Davidson” submits: Corporate insiders in general have a better sense of when their share prices are undervalued relative to future business prospects. The chart at openinsider.com shows that when markets have compressed prices for whatever reason, corporate officer outright buying of shares (not option exercises) increases dramatically relative to selling. Three recent periods reflect this, mid-2007 to mid-2009, fall-2011 to earlt-2012 and mid-2015-to Present. Each of these periods coincide with periods when the SP500 has traded below the SP500 Value Investor Index just as we see today. ...
We have two Weekly Bearish Reversals in play today. The first is a key level 15994 and the second is short-term 15942. Certainly, a closing beneath both will warn that the Dow may yet break to test under the 14000 level going into as late as the week of February 22nd near-term and possibly extend into March. The Monthly Bearish Reversal will come into play if we break and that lies at 13937. This is the number that would mark a more sustainable break to the downside rather than a short-term correction. So pay attention to this number for this defines the broader-term for now. We also have a Monthly Bearish Reversal at 16015. This is s...
Mortgage debt remained essentially flat in 2015 but the brief period of household debt deleveraging ended in 2013. Since then student debt, credit card debt, and especially auto loans have been on the rise. A New York Fed “Liberty Street” study shows Household Debt Grew Slowly in 2015 as Mortgage Balances Stayed Flat. Auto Loan Durations Hit Record High The rise in auto loans and student debt are both problematic. And the duration ofauto loanskeep going up and up. The average new car loan has reached a record 67 months, reports Experian, the Ireland-based information-services company. The percentage of loans with terms of 73 to 84 months...
Hedging your portfolio is a strategy that is often employed by those who want to take out some downside protection against the possibility of a market drop. The most successful application of this process is to reduce your exposure in highly appreciated long positions with the assets that demonstrate inverse or non-correlated properties to the broad equity market. This will allow you the flexibility of reducing your risk profile without having to shift your holdings to cash or disturb your existing cost basis in a taxable account. Playing defense in the midst of a correction or even a bear market may help you sleep better at night knowing tha...
The time to buy stocks is when there is “blood in the streets”. In late August through early September 2015, my sentiment charts were screaming BUY. That was a great time to buy for a tradable rally. I took profits as the markets rallied through the end of 2015 and sentiment rose. Many sentiment indicators are now close to the lows of last year Currently, on an intraday basis the S&P500 is down 14.4% from its record high. Note how the Russell 2000 small cap index is in a bear market, down 27% from its all-time high and 12% below its 8/25/15 low. Every week I review my sentiment charts of the weekly data. In this article, I compare the...