Friday, September 23, 2016

Semiconductors (SMH) Is Looking A Little Toasty

My Natural Gas UNG trade was pretty good this week but after the FOMC announcement and the successive rises we've had since I feel the market is at a minor inflection point right now. Lots of indexes are at key resistance areas (refer to my earlier post today to see what I mean) and the charts don't feel resoundingly positive as a whole. Case-in-point, Semiconductors Index ETF SMH which bounced two weeks ago off the lower Keltner Channel had a nice run of late with EMA(9) crossing over the EMA(13). Problem is though it now appears a weak looking ascending bearish wedge has appeared and SMH as a whole looks to be putting in a topping pattern. For the last few weeks I've stated that I'm quite content staying on the sidelines until the announcement came from the Fed, but now that it has, I'm perfectly content to continue being mostly in cash.

Conusmer Staples (XLP), Materials (XLB) and Retail (XRT) All Holding At Resistance

Three ETFs Still Worth Shorting

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Consumer staples…….
0922-XLP
……materials…….
0922-XLB
……and retail……
0922-XRT

Thursday, September 22, 2016

Gold Miners (GDX): Out Of The Gate And Down The Straight

Seems fortuitous that I re-posted an article from one of my favorite stock market commentators that suggests a bounce in gold and gold stocks before the FOMC announcement, but looking at the Gold Miners ETF GDX a bullish declining wedge was being put in which was promptly broken (smashed in-fact) right afterwards. Volume was incredibly high yesterday, well above the 180 moving average, meaning this is quite bullish. Because of the sharpness of the change since the correction began back in late July early August not all of my indicators have crossed over, but I expect them to over the coming week. 

Clive Maund: Where Will Gold Go Now?

PM Sector Alert Ahead Of Fed, Possible Double Bottom Completing...


The purpose of this update is to point out that the PM sector correction may be completing RIGHT NOW, with sector indices at the 2nd low of a potential Double Bottom. Whether it is or not depends on the outcome of next week’s Fed meeting – if they announce a rate hike, then both the broad market and the PM sector can be expected to break sharply lower. If they don’t – if they put it off again till later, or never, then the PM sector should take off higher again. We cannot know in advance whether they will hike or not, but we can be sure that their intentions have already been telegraphed to the 1%, so that they can position themselves to profit in advance.

Going solely on the year-to-date chart for the GDX, it does look like it is completing a Double Bottom at the support level shown, and setting up for another big rally, although it could break either way. The chances of it breaking to the upside are now rated at 65% - against 35% for a breakdown, and it does make sense for the Fed not to hike, as its prime duty is to keep asset prices elevated for the benefit of the 1%, not look after the economy – they abandoned that responsibility many years ago.

This would in fact be a classic place for a major new uptrend to begin; the sector has endured its deepest correction since this new bullmarket phase began, that has seen many quality stocks correct back heavily, and the sector has gone from being heavily overbought at the start of July to substantially oversold, and is in a zone of strong support above a rising 200-day moving average, which signifies that the larger trend is still definitely up. Yes, it could drop further if they hike interest rates next week, and it is this fear that is of course deterring would be buyers here.

How to handle this situation? – Well, one approach is to jump on the best PM stocks the moment it is clear that there will be no rate rise, if this is the outcome, for the sector can be expected to finish the day with a big white candle before continuing higher. Another approach is to take a chance and buy ahead of the announcement, and perhaps take out insurance in the form of Puts, in case a rate hike is actually announced and the sector then drops.

Whatever happens, the PM sector is certainly better value than it was two months ago, and statistically the odds favor the major uptrend resuming soon.

We will be looking at a range of better PM stocks to consider buying early this coming week on the site (we already looked at a range of Australian stocks in recent days).
End of update.

Wednesday, September 21, 2016

Low Oil Prices Are Now Like Chlamydia, You Just Have That S**t Forever

Cancel the oil price recovery?: New supply set to keep coming down the pipe till at least 2019

A crude oil supply shortage is looming, but it may not be upon us till at least near the end of the decade, according to RBC Capital Markets. "The steep drop in capital investment is... laying the foundation for a supply gap to emerge, by 2019, as long cycle-time projects, mostly sanctioned in a higher oil…

Japan: Part One Of Our Under-Whelming Central Bank Plan

Stop Killer

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Well, the big news tonight was what Japan would be. Here’s the skinny from our friends at ZH:

Disappointment on rates (no change)
  • *BOJ MAINTAINS POLICY BALANCE RATE AT -0.100%
But it appears BoJ unleashes its reverse twist idea…
  • *BANK OF JAPAN TAKES ADDITIONAL ACTION
  • *BOJ TO INTRODUCE QQE WITH YIELD CURVE CONTROL
  • *BOJ SCRAPS AVG MATURITY TARGET OF JGB HOLDINGS
  • *BOJ TO BUY JGBS IN LINE WITH CURRENT PACE (disappointing)
And ups it ETF-buying…
  • *BOJ: 2.7T YEN OF ETF BUYS FOR ETFS THAT TRACK TOPIX
Will do more jawboning…
  • *BOJ TO ENHANCE FOWARD GUIDANCE
  • *BOJ TO EXPAND MONETARY BASE UNTIL INFLATION STABLE ABOVE 2%
  • *BOJ BOARD VOTES 7-2 ON GUIDELINES FOR MARKET OPERATIONS
So the bottom line is bigger ETF buying, maintains rates (no easing), maintains bond-buying (no easing), unveils “yield curve control” (steepens curve but crushes bank balance sheets through long bond MTM losses)
But then they dropped the final tape-bomb…
  • *BOJ: MONETARY BASE MAY FLUCTUATE TO ACHIEVE YIELD-CURVE CONTROL
In other words – QQE size may increase… which the market liked…
Looking at the USD/JPY chart, it’s roaring higher, but at first the floor fell out (same goes for the ES) so whoever had stops in place……….sayonara!
Badges_Small NEW1

Tuesday, September 20, 2016

African Resource Development Continues Unabated

Uganda Oil Pipeline Opportunities to Be Unveiled

The Uganda-Tanzania crude oil pipeline business opportunities are going to be unveiled to private sector in special workshop next Tuesday. The workshop, organised by Tanzania Private Sector Foundation and Petro Fiorentini, expects to unveil opportunities available before, during and after pipeline construction. The organisers also expect to express the role of value chain and local content…

At The Most Critical Point When Strong Leadership Was Needed

A weakening world economy and a strengthening of Trump's appeal to voters

Now that summer is well and truly in the rear view mirror (it's so hard to return to the world of virtual wealth when there are very real diamonds of light still glittering on northern lakes), our principle theme going into the last quarter of 2016 is the increasing likelihood of a crisis-grade inflection point tipping…

Oil Glut In World's Biggest Market

China's crude oil output sees sharp drop

BEIJING - China's crude oil output fell 9.9 percent year on year in August, the biggest monthly drop since 2003 as refineries slashed production amid sluggish global oil prices, data from the National Bureau of Statistics showed Monday. Imports, on the other hand, have trended upward after private refineries were given permission to import crude last…

Monday, September 19, 2016

Like Canada, And Much Of The Rest Of The World Too, Global Investment Is Divided By An Iron Curtain

Black swans approach for Canadian investors

The polarity in the global discourse on what lies ahead for world markets and the global economy is absolute. The resounding chorus affirming a positive outlook in the United States contrasts sharply against the dire warnings of money managers and bankers in Europe and Asia. Canadian investors are still in a state of shock to some…

Natural Gas (UNG) Breakout

I've followed Natural Gas ETF UNG closely for a long time because if you can get it right, the gains on it are fantastic. Unfortunately, it is fabulously volatile and you can get wiped out very easily. Right now UNG has been making some bullish gains. There's been an ascending support line that was hit twice in August and once more this month which have made up our lower boundaries. Our upper limits have been a resistance line from highs back in July, August and September. Friday, UNG was one of the few equities getting strong bids throughout the day and it convincingly broke out above resistance with a 1.17% gain. In the coming trading sessions we'll be looking for a confirmation of this breakout with another close above the line. The next stop will be around $8.80. Our ultimate target is $13.25 with a stop along the way at around $9.40.

Sunday, September 18, 2016

Agriculture (DBA) Quietly Appearing Bullish

Agricultural ETF DBA has been pummeled since late June but in that time has produced a fantastic looking bullish declining wedge. A new buy signal was produced on Friday which has me looking at other commodities too, now (more on that tomorrow). DBA is bearishly aligned within it's EMA's so caution is urged, a caution which is echoed by it's low volumes, too. Lower highs however have appeared on the RSI(5) creating some divergence with the MACD joining the chorus. I know next week is a critical week for the market with the FOMC on Tuesday but DBA should get a serious look by day traders who can have a long/buy at around $20.40 with tight stops around the EMA (9) or (13).

Saturday, September 17, 2016

Energy Looking Increasingly Bleak

Cracking Crude

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This is mostly a comment cleaner, as you chatty Slopers have racked up about 400 comments from my last post yesterday. My dogs are staring at me, though, eager for their way-too-early-every-morning stroll through the pitch black streets of Palo Alto. Thus, I will share this one chart of crude oil, which has the new front month of November. My view is that breaking 43.59 is the next important event, since that’ll slice us through a trendline that’s been in place the entire year.
0916-crude
As I was typing this, a slew of economic data came in, and early reaction seems to be not-so-thrilled. I certainly hope it sticks, since it’ll mean my prediction of a “second trap” (mentioned in the prior post) will have proved itself prescient.

Friday, September 16, 2016

Streaming: The New Business Model In The Mining Market

Courtesy of: Visual Capitalist

An Appetite For Debt Becoming More Popular Elsewhere In The World, Too

Canada's household debt is now bigger than its GDP, for the first time

OTTAWA - The appetite of Canadians for debt continues to grow to record levels. The ratio of household credit market debt to disposable income climbed to 167.6 per cent between April and June, compared with 165.2 per cent in the first quarter, Statistics Canada said Thursday. That means that households now owe about $1.68 in credit…