Stocks & Equities
Over the last couple of week’s, I have written extensively about the breakout of the market above the downtrend resistance line that traced back to the 2015 highs. To wit:
“With the breakout of the market yesterday, and given that ‘short-term buy signals’ are in place I began adding exposure back into portfolios. This is probably the most difficult ‘buy’ I can ever remember making.”
I also stated that it was probably a trap and that I will be stopped out in fairly short order. But that is the risk of managing money.
It was only a matter of time before the extreme short-term extension of the market begins to correct. Like stretching a rubber band to its limits, it must be relaxed before it is stretched again. The question is whether this is simply a “relaxation of the extension” OR is this a resumption of the ongoing topping and correction process?
Let’s take a look at a few charts to try and derive some clues as to what actions we should be taking next.
related:
NYSE Dangerous Technical Action Chart
The situation is paradoxical – gold and silver have broken out upside despite already extreme COT readings, yet the dollar has still not broken down. This setup continues to warrant caution, yet if the dollar should break down from its potential top area and drop hard, gold and silver will go into a vertical meltup – and here we should not forget the tight physical supply situation. In the last update we expected gold and silver to drop due to the COTs extremes, but they have done the opposite resulting in even greater extremes, which in silver’s case are “off the scale”.
On gold’s 1-year chart we can see that after a two-month trading range, gold has at last broken out upside from it, and appears to be starting another upleg, although the large gap between the moving averages and the COT extremes give cause for concern. Momentum (MACD) has taken a sharp upward break from a low level and looks positive.
….read more analysis and view large charts HERE
related:
The Fed has been trying to promote inflation. That is not the guy with the tin foil hat speaking, it is direct from FOMC statements targeting a higher inflation level, which is another way of saying they are targeting a lower US dollar level. From this we leaned toward that which would benefit from a declining USD. Precious metals (led by silver) are a prime beneficiary, with oil and some commodities remaining firm despite pressure on stock markets as corporate performance and economic signals continue to fade.
Interestingly, the Bank of Japan played a big role in the ‘inflation trade’ last week as Kuroda signaled, temporarily at least, that it was the US’s turn to devalue in the global game of currency Whack-a-Mole in which BoJ was a star figure for so long. In one week, the US Fed rolled over and played dead (again) and the Bank of Japan surprised markets by refusing to intensify its ongoing inflationary operation.
One wonders how well coordinated these policy bodies are. Recall that while BoJ and ECB were softening global investors up to the idea of globally pervasive negative interest rate policy (NIRP), the US Fed was (in my opinion) pretending to be a beacon of sound policy in making a pathetic move of +1/4 on the Fed Funds Rate. Now that Goldilocks has long-since left the story, the Fed can pop its head up and promote inflation itself, with the BoJ mole standing down. Here is a chart of JPY/USD overlaid with gold and silver…
related:
The future of the emerging legalized Cannabis Industry on a global scale, along with the war on drugs and the next upcoming star in the global theater, Colombia.
related:
Michael’s Campbell’s Money Talks guest Mark Leibovit speaks about the vice industry as the federal government rolls out it’s plans for decriminalizing marijuana in Canada. He answers the question – who will reap the profits? Also breaks down the players – suppliers, distributors, retailers and regulators.
{mp3}grant/043016y{/mp3}
1. What’s Next From A Man Who Got It Right
Michael Campbell’s guest, Eric Coffin, has made some amazing recommendations recently with the turn in gold stocks. His subscribers saw triple digit gains from three pre-production companies on his list due to mergers and asset sales. He also tells Mike about some developers that have done even better.
Listen to this 16 minute interview with Eric HERE
2. Jim Rogers on America’s Imminent Recession
“I do know that things are getting slower in China, they have to. One of their largest trading partners, Japan, is in recession. Many European nations are in recession. Parts of America are slowing down.
3. Silver: The “Five Year Plan” and the Great Leap Forward
Examine the following log-scale graph of COMEX silver. The red lines are 4.75 years apart. The green line shows a long term exponential trend upward
-
I know Mike is a very solid investor and respect his opinions very much. So if he says pay attention to this or that - I will.
~ Dale G.
-
I've started managing my own investments so view Michael's site as a one-stop shop from which to get information and perspectives.
~ Dave E.
-
Michael offers easy reading, honest, common sense information that anyone can use in a practical manner.
~ der_al.
-
A sane voice in a scrambled investment world.
~ Ed R.
Inside Edge Pro Contributors
Greg Weldon
Josef Schachter
Tyler Bollhorn
Ryan Irvine
Paul Beattie
Martin Straith
Patrick Ceresna
Mark Leibovit
James Thorne
Victor Adair