Saturday, January 30, 2016

Did a 'buy' signal just go in for Biotechnology?

During this small relief rally we've been having lately, several people have noticed that Biotechnology ($BTK) hasn't been playing along. Prices continued to seem depressed while oil and energy (the other downtrodden sector in the market currently) had a rally. Wednesday/Thursday $BTK saw the equity break it's neckline at around 2950 with the possibility of a further fall with the strong possibility of an imminent collapse. However Friday saw a strong bounce back with a higher low appearing on the RSI (5). Could this be a 'buy' signal? Several indicators are oversold such as the stochastics with MACD strongly negative at this point, so the timing at this point seems appropriate.
On the weekly chart $BTK seems to have come into contact with the support line for a downward channel set up by lows back in April and October.

Friday, January 29, 2016

Guest Post: Japan at negative rates and now China at record liquidity injection, I smell deflation

Stocks rebound after central bank injects record liquidity

An investor watches an electronic board showing stock information at a brokerage office in Nanjing, Jiangsu province, Jan 29, 2016.[Photo/IC] Stocks rallied on Friday, as the central bank injected a record liquidity this week to tide over shortages which often accompany Chinese New Year holiday. The benchmark Shanghai Composite Index climbed 3.1 percent to close at…

Wednesday, January 27, 2016

What's up with commodities and the U.S. dollar? Something going on the rest of us don't know??!?

I must confess I love being OCD, it has definite advantages. Not upsetting my mother so much while I was a child might have been nice, but now as an adult living on my own I have to say being OCD is actually cool. It means my little apartment is clean and smells nice when women come over. It means there's a certain present-ability about myself when patient's see how I dress at the hospital. It means I won't stop til I've landed a particular step-up or drop on my bike or risk having my ego implode if it means riding home knowing I couldn't do it. It means I won't stop till all six of my arrows have hit the red '10' area on my target before I can call it a day. It also means that I periodically return to charts, even if it means just glancing at them, because I live in mortal fear that I might be missing something (also, general curiosity).

When this website first started I thought I'd cover all the commodities, so the charts at least are all present for me to do this. Glancing at them recently I've begun to notice however that bullish declining wedges are appearing in a few of them which has left me a little confused as I can't rationalize the market in the next six months with rising commodity prices. The image I have of things unfolding over the next six months is increasing VIX/volatility and an S&P filling a megaphone shape. In a difficult global market that is trying to absorb and grapple with the sheer scale of the oncoming Chinese credit bubble doesn't really have any room for rising commodities, so what's going on?  Does this means the U.S. dollar is going to tumble in the near future to explain these rises, because I can't come up with anything else?!?

Coffee: JO
 Commodities ETF: DBC
Copper: JJC
 Crude Oil: USO
 Agricultural ETF: DBA
 Palladium: PALL
 Silver: SLV

The U.S. dollar seems to be putting in two separate ascending bearish triangles. Let's see how things pan out over the next few months.

Monday, January 25, 2016

Daily News Roundup: I love cooking with wine. I even add it to the food sometimes.

International Affairs:
Mid-Caps in Britain have the most to lose from Brexit (Bloomberg)

Business & Finance:
Cracks exposed in U.S. bond market as liquidity woes warp market (Bloomberg)
Iran's banks could be allowed to restart trading in U.K. after trading sanctions lifted (The Telegraph)
America's banks are not yet out of the woods (The Economist)
Stocks have put in a low, but it's not the big low (Market Watch)

Commodities:
Oil drops after Saudis say they will maintain spending (Bloomberg)
Gold is back in fashion at $15 trillion global selloff (Bloomberg)
Eldorado Gold warns of $1.6 billion write down after halting work in Greece (Financial Post)

Environment:
Japan's Kyocera begins construction on world's largest floating solar array (Power Technology)

Art & Design:
"Star Wars" imagined as "Calvin and Hobbes" (Design You Trust)
 Wide Open: Beck and The Chemical Brothers (The Awesomer)  

Sunday, January 24, 2016

"You get a 'buy' signal, and you get a 'buy' signal, everyone gets a 'buy' signal"

Much like Oprah and her Pontiac giveaway years and years ago, the pessimism throughout the market has temporarily given way to relief in the form of 'buy'-signals-everywhere retracemnet. Indicators lines are crossing over and oversold conditions are beginning to reverse. This is very similar to early 2008 when Bear Sterns went bankrupt and the general market seemed to recover (albeit in a high volatility environment) prior to the crash later in October that year. Energy so far seems to be the big story at the moment with Citi calling it "the trade of the year," however has Barron's has reported there is a sharp divergence developing between oil's premium over discount on NAV. Zero Hedge has noticed that this earily similar to 2007 when mortgage defaults started to increase yet credit default swaps that tracked them continued to decline. In the meantime I feel this bounce should be taken advantage of.

Biotechnology has put in a 'buy' signal on the RSI(5) but movement upwards so far has been disappointing.
Small caps are a personal favourite at the moment and looking quite good. A strong signal on the RSI(5) with a bullish declining wedge appearing. 
Volatility has put in a "sell" signal which I have shorted via SVXY. 
Energy is currently the market darling with an impressive move on Friday. Resistance appears on $XOI at 1000 and 1060 as part of a bullish declining wedge.

Saturday, January 23, 2016

Guest Post: Nothing is spared in energies "race to the bottom"

CNPC to boost natural gas output this year

China National Petroleum Corp, the country's biggest oil and gas producer, plans to increase natural gas production this year and maintain crude output near 2015 levels. Natural gas output will go "higher" and oil production will remain "stable," Deputy General Manager Wang Dongjin was quoted as saying in a statement posted on the company's website. Details…

Guest Post: Good things may come to those who wait, but what massacre still lies ahead in oil?

Som Seif: Be patient on oil and the payoff will be big

Som Seif, President and CEO of Purpose Investments, discusses the huge drop in oil and what investors can do while they wait for it to bounce back.…

Friday, January 22, 2016

Daily News Roundup: Monopoly must be an old game. There's a luxury tax and rich people can go to jail.

Business & Finance:
Soros expects hard landing for China on economy (Bloomberg)
ECB survey backs case for stimulus boost (Bloomberg)
Draghi signals action (The Economist)
Hong Kong exchange fund posts worst results since 2008 financial crisis (The South China Morning Post)
World face's wave of epic defaults (The Telegraph)

Commodities:
Oil in biggest rally since August (Bloomberg)
Barrick Gold shares are sinking this morning after warning of $3 billion writedown (Financial Post)
Top oil trader Mercuria sees market bottom as producers bleed (Bloomberg)
Idled rigs stack up as crisis grips North Sea (CNBC)
China's December liquid natural gas imports rose 4.6 percent on year (Reuters)

Environment:
Blizzard heading towards U.S. east halts thousands of flights (Bloomberg)
China closing 4,300 coal mines (Mining)
China bested Germany in solar energy storage (Alternative Energy Magazine)

International Affairs:
Italy races to diffuse $200 billion bad loan time bomb with "bad bank" (Zero Hedge)

Art & Design:
End of an era in sight for Boeing 747 (The Telegraph)
Fighting erosion with geometric designs (Design You Trust)
"Tilt shift" re-imaginations of Van Gogh masterpieces (Design You Trust)
Office warfare: Nerf Rival Khaos MXVI blaster (Hi Consumption)
Master of Your Domain: Seinfeld to auction 1974 Carrera 911, 1958 Carrera Speedster, and 1955 550 Spyder (Cool Material)

Sunday, January 17, 2016

Small Caps (IWM) and Silver (SLV): All things shiney and small

Please don't construe my endorsement of small caps for the coming week given the kerfuffle we've been through this last week as "over," cuz' it ain't. I had been noticing some divergences emerging in various places, most notably on the weekly charts for $NYSE courtesy of Northman Trader, but given the distance that IWM is outside the Keltner channel and how much the market is generally oversold, what we could be witnessing is the final reprieve before our next leg down. Mella@Mella_TA (of Northman Trader) has put the SPX in the major "buy" zone with a bounce ostensibly to around 2040. I noticed looking at IWM on the weekly chart that a line I had put in a long time ago is now showing up as resistance for the third time (the first two were February and October 2014) and finally this out-of-left-field call seemed to be making sense. What is emerging is a declining megaphone which foretells a lot of volatility in the coming weeks.
Looking at the RSI(5) on the daily chart for IWM a higher low might be going in, giving us a short-term 'buy' signal. I am happy to read this alignment of data as a speculative long/buy.
Also coincident with a retracement in the broad market (and likely fall in the U.S. dollar) is the appeal that silver (SLV) has for me at the moment. I think the daily charts are presenting a lot of momentum developing behind a major move next week in silver and probably precious metals in general.
We are still in our long term bullish declining wedge but momentum has been building behind SLV since 2013. I don't expect this move next week to be "the" move, but I do expect it to leave people thinking a little bit differently about silver and it's future in the broader market.

Guest Post: You know things are crazy when China thinks oil prices are too low

With no bottom on oil prices in sight, producers given little to cheer about

Even the world's largest petroleum importer thinks oil prices have fallen too low. This week, China set a US$40 per barrel price floor for domestic fuels to protect local producers and curtail the use of cheap fuel. Inconsolable oil investors wish they, too, could conjure up a bottom on oil prices, which have fallen 20 per…

Daily News Roundup: Every zoo is a petting zoo unless you're a little bitch

Business & Finance:
Britain's financial markets are creaking (Bloomberg)
Norway's top tech fund snaps up Apple again after stock rout (Bloomberg)
Middle East stock markets crash as Tehran enters oil war (The Telegraph)

International Affairs:
People's Bank of China said to impose reserve ratio on offshore bank Yuan accounts (Bloomberg)
Brexit campaigners are already gearing up (The Economist)
A formidable challenge: Taiwan's first female Prime Minister (The Economist)
Commodities:
Mideast stocks plummet as Iran plans to boost crude exports (Bloomberg)
Kurdistan to begin natural gas exports to Turkey in 2019-2020 (Rudaw)
Russia likely to scale down China gas supply plans (Reuters)

Environment:
Increasing global renewable energy would increase global GDP by $1.3 trillion (Clean Technica)

Science:
Researchers find water ice on comet 67P's surface (Slash Gear)
Ice volcano on Pluto? (Slash Gear)
Art & Design:
Flamboyant Madrid Chef finally to bring shocking food to London outpost (Bloomberg)
Lexus LC500: A game changer for Lexus? (Cool Material)
Treehotel: An unspoiled affair in Sweden (Bless This Stuff)

Wednesday, January 13, 2016

Guest Post: Two strikes and we're out!

MARKET CRASH - last week was the 2nd and FINAL WARNING...

Many were talking about the market crashing last week and the mainstream financial press were waxing hysterical, but as we will now see the crash hasn’t even started yet. If the press got like that last week, imagine what they will be like when it really does crash – last week was just a “warmup”, the 2nd and final warning, the 1st warning was the plunge last August.
On the 10-year chart for the S&P500 index, we can see that while the market did indeed drop hard last week, it still has not broken down from its Head-and-Shoulders top, the lower boundary of which is shown by the thin black line. When it does break down from the top area, there is an awful lot of air below it – it has a long, long way to drop, and the decline is likely to be precipitous.

On the 5-year chart for the S&P500 index we can see a big Head-and-Shoulders top pattern completing gracefully beneath a giant Dome top, with the index dropping back exactly as predicted in the 2nd January update from its Right Shoulder peak, where we shorted it. The drop last week was steep, resulting in a short-term oversold condition, so we should not be surprised to see a bounce soon, or at least a period of choppy sideways movement, before it breaks down from the top area and plunges.

An important catalyst for the steep drop in world markets last week was the sudden renewed mayhem on the Chinese markets. Before the end of last year we had worked out that the preceding rally was a countertrend bearmarket rally that had run its course, and that it would be followed by another steep drop, so we shorted the Chinese market via a triple leveraged inverse ETF.

Any claims that a genuine economic recovery has taken hold are exposed as hollow and lacking any substance by the following 2 charts. The first is for the Baltic Dry shipping index, which even taking into account a glut of newly constructed ships, looks absolutely terrible – and is a harbinger of economic depression.

That the pitiful level of the Baltic Dry index is not an anomaly is made plain by the long-term commodity index chart. This shocking chart reveals that commodity prices are at more than 42 year lows and it shows that the world is tipping into a debt induced depression. Low as it is, it could drop even further if we now see a stockmarket crash soon, as looks likely.

The Fed’s recent raising of rates, and statement that further rises are in the pipeline, is widening the differential between (negative) rates in Europe and the US, and tightening the stranglehold on those who collectively still hold a cool $9 trillion or so of carry trade obligations. This is threatening to force an upside breakout by the dollar from its recent lengthy trading range. If it does break out upside from the range, all hell will break loose and the dollar could ramp up to the 120 area on the index and perhaps even higher. On the long-term chart for the dollar index below, we can see that the pattern that has formed from the highs of last March now looks like a bull Flag. If it is, the dollar will soon be on its way to the 120 area. This risk is the reason why, even though we are aware of the extreme undervaluation of gold and silver stocks, we have been hesitant about piling into them until now. If the dollar does make a last “swansong” rally to the 120 area, that is when we will pile into the PM sector in a more unrestrained manner. Senior economic geologist Nigel Maund has written an extensive report on the best Australian mid-cap gold mining stocks, entitled GOLD MID-CAPS PLAN OF ACTION, PART 1: THE AUSTRALIANS, in preparation for this time, and will be writing a similar report on the best Canadian mid-cap gold mining stocks in due course.


If global stockmarkets crash, as in 2008 only probably worse, then in addition to the dollar going on a tear it is likely that investors will seek safe haven in US Treasuries again, despite growing Sovereign risk. On the 2-year chart for T-Bond proxy TLT below, we can see that they are now set up for a substantial rally with a large Symmetrical Triangle closing up, although this Triangle could theoretically break in either direction. A rally in Treasuries would occur in lockstep with a dollar rally.

Finally, a number of investors, brain-addled by Wall St propaganda, have taken to entertaining the fanciful notion that world stockmarkets will be towed higher by the stocks of “fluff” companies like Facebook, Amazon, Netflix and Google, who now have the acronym of the “FANGs”. This seductive but dangerous presumption might be more believable if these stocks weren’t already well into bubble territory. The long-term chart of the most extreme of these, Amazon, which we bought Puts in at the start of the month, is shown below. As we can see it is in the final vertical blowoff phase of a multi-year bullmarket, and once the extremely steep vertical 3rd trendline fails, which should happen soon, it will crash and burn, probably along with the other FANGs, and the Tech sector at large, including, and especially, Biotech, and the market will finally lose its low grade leadership and plunge.

End of update.

Tuesday, January 12, 2016

News Roundup: Abs are cool, but have you tried stuffed crust pizza?

International Affairs:
RBS cries "sell everything" as deflationary crisis nears (The Telegraph)
China's hard landing to trigger meltdown in India (Zero Hedge)

Business & Finance:
British Columbia says Kinder Morgan hasn't met pipe conditions (Bloomberg)
How David Bowie became a pioneer in the worlds of finance and the internet (The Telegraph)
Is this 2008 all over again? George Soros sounds the alarm (The Economist)
We are entering a period of "irrational pessimism" (Financial Post)
 
Commodities:

Morgan Stanley see chance of $20 oil (Bloomberg)
Commodities on the ropes, world stocks shaky as China takes fresh pounding (Financial Post)
Crude oil tumbles to 12 year low as Hedge Funds or exit (Bloomberg)
Unwanted piles of corn, soy spurs most bearish crop outlook ever (Bloomberg)

Environment:
Denmark ramps up renewable investment in Iran (Oil Price)
Egypt offering $6 billion in green energy prospects (Trade Arabia)

Art & Design:
Blackstar: David Bowie's final album (The Economist)
Smallest vehicle at the Detroit Auto Show: The Audi Lunar Quattro (Slash Gear)
 A floating forest is being installed in Rotterdam (Design You Trust)
 Yes, it's happening Elvis and Nixon (Michael Shannon and Kevin Spacey) the movie (The Awesomer)



Monday, January 11, 2016

Natural Gas (UNG): Sell signal in place, gas is still being let out of the balloon

I think Natural Gas is just putting in a second wave of a retracement before continuing down. One day it will return to $6 but for now it's headed towards $2. The recent euphoric rise has been a little too-good-to-be-true, and of course any long term rise can't first begin without a few corrections along the way. Please pay close attention to the RSI(5) which has generated a short term sell signal. The ascending bearish wedge continues to hold nicely. I foresee any fall from this wedge heading to the gap on UNG at $8.00 to $7.75.

Guest Post: Volatility is the new black

Think this week's market turmoil was brutal? Get used to it, volatility is the new reality

For global stock markets, it was the worst opening in two decades. The S&P 500, which declined almost six per cent this week, has seen only one worse start to the year since 1929. In Canada, the S&P/TSX Composite Index plunged into a bear market, defined as a 20 per cent or more slide from its…

Friday, January 08, 2016

Guest Post: Scary, but perhaps inevitable?

China shuts down market for second time this month as savers panic about yuan

China shut down its stock market for the second time this week on Thursday as it appears Chinese savers are losing confidence in the yuan and are shunning the country's stocks following multiple surprise devaluations by the Chinese central bank. The instability in China on Thursday spread to global markets, with the Dow Jones Industrial Average…

Thursday, January 07, 2016

Market Update: Natural Gas (UNG, $NATGAS), Biotechnology ($BTK), Gold Miners ($GDM), Volatility (VXX), and $NYMO

A lot of recommendations I've made recently need to be reviewed so I just thought I would mention them here.

My short/sell on biotechnology ($BTK) was spot on except I exited the trade a little early and have subsequently missed out on the last two days. The problem is, the daily charts are not much help in suggesting whether there's going to be another buying opportunity (I really want to get back in). When I look at the weekly chart, another picture emerges and that's that the breakdown in the bearish ascending wedge has just started. When I do enter, it'll be a crap entry but I was previously of the belief that this would be a small short-term correction, but this recent development suggests there is more to come.
My suggested short/sell on natural gas ($NATGAS) will unfortunately take at least two more weeks to materialize. My apologies, but I called the downturn a little early.
My long/buy call on gold miners was also spot on, but embarrassingly it's a little stronger and faster than I originally imagined. This of course is because capital outflows from China have been about fifth of what's actually been reported. In addition to this, Saudi Arabia has now reported their interest in devaluation as well.
Where are we headed? Well the VXX chart might help you by showing that it has just broken upwards.
Also, the NYMO chart shows that we have a lot of distance still to cover before we reach the lower Keltner band. The 14 day stochastic indicator has (worryingly) just crossed over.

Daily News Roundup: Someone's therapist knows all about you

Business & Finance:
British pound drops to weakest since 2010 (Bloomberg)
China scraps emergency circuit breaker as FTSE crashes below Black Monday lows (The Telegraph)
Saudi Arabia weighs IPO of state oil company (Bloomberg)
Evans Pritchard: Is the theory of secular stagnation a hoax? (The Telegraph)
Is this 2008 all over again? (The Economist)

Commodities:
Iran's bid for oil investment seen at risk from Saudi dispute (Bloomberg)
OPEC basket crude crashes below $30 for the first time since 2004 (Zero Hedge)
More China nuclear power milestones (321 Energy)

Environment:
El Niño's peak has weather forecasters warning of La Niña (Bloomberg)
Brazil doubles solar targets for utility scale and distributed generation (PV Magazine)
General Electric increases ownership stakes in two U.S. wind farms (North America Wind and Power)

International Affairs:
Saudi devaluation odds highest in 20 years, kingdom now more likely to default than Portugal (Zero Hedge)

Art & Design:
"Inception" coffee table by Stelio Mousarris (Design You Trust)
It's baaaaacckkkk: Panasonic re-introduce the SL-1200 (Hi Consumption)
VW electric van concept (Uncrate)

Tuesday, January 05, 2016

Silver (SLV): Coming to the End of It's Tether (albeit an intermediate one)

A while back I had identified a promising looking bullish declining triangle in silver. I personally believe that this is another scenario of an inception "triangle inside a triangle" where due to the shear size and length of the decline that the equity is a part of, a series a lower highs are needed before a break-out finally emerges.
Silver is coming to the end of an intermediate triangle that started in late October and needs a lower-high that will test $14.00 to $14.20. This will likely be one of a series of bullish triangles that we will see before a re-test of the larger declining wedge that started back in August of 2013 is made. I wouldn't rush to make any long term bets because this look like it could stretch out for a year or more based on the weekly chart. I do think the imminent breakout near-term is still something that should be taken advantage of.