Economic Outlook
Former Fed Chairman Alan Greenspan said Thursday that monetary policy has reached the outward bounds of its effectiveness without another round of quantitative easing.
“Monetary policy … has done everything it can unless you want to put additional QEs on. They’re not helping that much in the sense that ultimately determines whether or not you’re getting an effect from the QEs” beyond increasing price-to-earnings ratios in the stock market, he said during an interview on CNBC.
also:
Marc Faber on Terror’s Effect on Markets
Gold continues to astound most analysts, as it moves relentlessly higher. Click on the chart to the right now. Double-click to enlarge this daily gold chart.- The triangle pattern in bullish play is perhaps best described as an “Ode To Awesomeness”. Note the inverse head and shoulders bottom pattern that has appeared. That should help drive the price up and out of the triangle pattern, to my $1305 target area.
- It feels like the bullion banks barely finish settling one price manipulation lawsuit, and then another begins. Please click here now. Scotiabank, which is also facing lawsuits for price manipulation in the United States, is now facing a massive class action lawsuit in Canada.
- Please click here now. While the bullion banks of the West are facing a barrage of lawsuits, China has launched the SGE gold price fix system, and the launch may be part of the reason gold is moving strongly higher this morning.
- Please click here now. Although the trading departments of many banks are facing lawsuits for manipulation, many bank analysts are doing superb research, and Joni Teves at UBS is one of them.
- The UBS Global Macro department research team can move significant institutional liquidity flows with its reports, and Joni is clearly very positive about gold right now.
- Please click here now. Not to be outdone, technical analysts at HSBC have set a $1500 target for gold!
- In late 2015, the price of sugar began to rise. I’ve noted that significant rallies in sugar tend to lead quite dramatic rallies in silver.
- Sugar has started to rally again. Is silver poised to follow, and launch a “barnburner” type of upside rally? For the possible answer to that question, please click here now. Double click to enlarge. This daily chart of silver looks spectacular!
- The breakout this morning is likely SGE-related, and there’s an outside possibility that Scotiabank is winding down some short silver trades, to do in-house window dressing for the lawsuit.
- Regardless, I think the entire Western silver community deserves a real “Wheeeeeeeeeeeeee!” moment in time. That time is likely here! From a technical standpoint, silver is staging a significant breakout from a large inverse head and shoulders bottom formation.
- Over the years, I’ve argued emphatically that the entire Western gold and silver community should generally avoid the action of “chasing price”, but if ever there was a time to do so, it’s right now.
- With the “blastoff” action in play in the silver market this morning, momentum enthusiasts should be ready to buy the breakout right now.
- I have a short-term target of $18, and if China’s soft landing morphs into the soft upside takeoff that I’m projecting, silver could move towards $25 and gold towards $1500.
- I will note that bank and IMF economists are already revising their GDP numbers for China to the upside, and rightly so.
- Please click here now. Commodity trading is surging in China again.
- The jeweller strike is over in India, and the Akshaya Tritiya festival is approaching. Indian buying may also be a factor in this morning’s price action.
- That’s not really important. What’s very important is the approach of a good monsoon season, against the background of real world-leading GDP growth.
- Gold demand in India is set for a significant long-term rise, and with each day that passes, the SGE in China is going to work tirelessly to make price discovery better reflect real physical demand versus real physical supply. It’s not an event. It’s a process, and a very positive one for the long-term price of gold!
- Please click here now. Double-click to enlarge this dollar versus yen daily chart.. The main reason I sold a third of my physical silver for gold in 2011 was the “risk-on” signal being flashed by the US dollar against the yen.
- I bought that silver back in 2014, as the dollar began to peak against the yen, flashing a significant “risk-off” signal for the world. As one example, the US stock market rose strongly in the 2011 – 2014, and has since acted more like a wet noodle. The risk of an American stock market crash is now quite high.
- I think the USD-yen relationship is on the verge of changing, because the fundamentals of the relationship are changing. The Abe/Kuroda team in Japan seem obsessed with managing a government debt crisis by raising taxes, buying stock market ETFs with more printed money, and perhaps reneging on principal payments to bondholders, after taking interest rates into negative territory.
- The citizens of Japan are the world’s largest creditors, but their government is one of the world’s largest debtors. The debtors refuse to reduce debt and are engaging in reckless fiscal policy. This may be creating a situation where the next major rally in the dollar against the yen is not a risk-on signal for global stock markets, but a buy signal for gold!
- Please click here now. Double-click to enlarge this fabulous GDX daily chart. Gold stock enthusiasts should watch the $23 area closely. GDX is rising up from a bull flag pattern. If it moves above $23, the door is technically open, for a surge to my $28 -$30 target!
Thanks!
Cheers
st
Apr 19, 2016
Stewart Thomson
Graceland Updates
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Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am. The newsletter is attractively priced and the format is a unique numbered point form; giving clarity to each point and saving valuable reading time.
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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualifed investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:
Are You Prepared?
In This Week’s Issue:
– Stockscores’ Market Minutes Video – The Power of Trades That Feel Wrong
– Stockscores Trader Training – Understanding Confirmation Bias
– Stock Features of the Week – Penny Stock Revival Part 2
Stockscores Market Minutes Video – The Power of Trades That Feel Wrong
Trades that frighten you, those that don’t seem to make any sense, often work the best. This week, I explain why and then provide my weekly market analysis.Click Here to Watch To get instant updates when I upload a new video, subscribe to the Stockscores YouTube Channel.
Trader Training – Understanding Confirmation Bias
Investors usually do some research on the stocks that they are considering purchasing. This might involve checking the company’s financial position, reading their recent news releases or consulting research done by experts. The aim is to make a well informed decision.
If the research satisfies their criteria, a trade will be made. For most investors, that trade brings with it a dangerous commitment. Since no one likes the pain of suffering a financial loss in the market, the investor now has a vested interest in finding any information that they can to confirm that they have done the right thing.
Behavioral finance researchers call this confirmation bias. This is the tendency to seek out information to confirm their trading position and ignore or underweight anything that runs contrary to their financial interest. It is dangerous practice and one of the reasons why I think the small investor should not seek out any information at all when buying stocks. Instead, just learn how to interpret the market’s message.
Let’s say you buy a mining stock that has some gold projects that have good potential. Before you buy the stock, you read the company’s news and some analysis done by a mining expert who publishes a newsletter. All indications from your analysis is that this stock is likely to go higher.
After you buy it, the stock does go higher, adding further credibility to the research work you have done. Then, one day, the stock makes a very abnormal move lower without any corresponding bad news. You go on to a stock market message board and find a few comments about initial results from the project rumored to be poor but most comments confirm what you know; the company has some great projects.
You ignore the naysayers and seek out other information that confirms that your stock is a good one to hold. You find enough good information to convince yourself that the market’s recent downward move is an overreaction and wrong.
In doing so, you have behaved like a normal human being eager to avoid pain and pursue pleasure. Unfortunately, we humans are myopic and, in this case, you are likely avoiding short term pain but increasing the chance for long term pain. The market moved down for a reason and, if you wait to find out why, it is usually too late.
I believe that fundamental analysis is essential for the market to function and has to be done. However, it does not have to be done by you because you do not have the resources to do it well. Those who do it right will tell you what they know by their actions in the market. Just listen to them.
If you know too much about a company, you are likely to fall in love and commit the sin of confirmation bias. If you must seek out information, make sure you are balanced in how you do it.
Last week I highlighted the improved market action in the Canadian Penny stocks. This sector of the market has been the doggiest of dogs for many years but in the past couple of months, it has done very well. Take a look at the chart of the TSX Venture index ($JX on Stockscores) to see how the market has done. The leaders have been in mining with Lithium, Silver and Gold the groups that have had the action. Some Biotech names have been doing well too. My two picks from last week’s newsletter were V.SCZ which is now up 57% and V.AVL which has gained 39% at the time I am writing this. These are gains in just one week.
The easiest way to do well in the market is to trade the hot market. The TSX Venture is hot again so this week I scanned for Canadian stocks under $2, making a 3% gain today and trading at least 100 times. Here are a couple of standout charts:
1. V.GPH
V.GPH is a story that I know too well, I bought a lot of it a couple of years ago when it struggled against a weak market. Now that Lithium stocks have been strong on the Tesla battery story, people are starting to notice this one as graphite is also needed for electric cars. Most importantly for me is that the stock is breaking up from a flag pattern after showing life in early March, taking the Stockscores above 60. Support at $0.095.
2. T.CS
T.CS is a copper miner with a good turnaround chart. Broke the downward trend at the start of March and now breaking up from a rising bottom today. Stockscore now above 60. Support at $0.095.
For Tyler’s Penny Stock Revival Part 1 go HERE
References
- Get the Stockscore on any of over 20,000 North American stocks.
- Background on the theories used by Stockscores.
- Strategies that can help you find new opportunities.
- Scan the market using extensive filter criteria.
- Build a portfolio of stocks and view a slide show of their charts.
- See which sectors are leading the market, and their components.
Tyler Bolhorn: Last week I highlighted the improved market action in the Canadian Penny stocks. This sector of the market has been the doggiest of dogs for many years but in the past couple of months, it has done very well. Take a look at the chart of the TSX Venture index ($JX on Stockscores) to see how the market has done. The leaders have been in mining with Lithium, Silver and Gold the groups that have had the action. Some Biotech names have been doing well too. My two picks from last week’s newsletter were V.SCZ which is now up 57% and V.AVL which has gained 39% at the time I am writing this. These are gains in just one week.
The easiest way to do well in the market is to trade the hot market. The TSX Venture is hot again so this week I scanned for Canadian stocks under $2, making a 3% gain today and trading at least 100 times. Here are a couple of standout charts:
For the Full 
go HERE
On the heels of the Dow surging to 18,000, today a 50-year market veteran spoke with King World News about the great dangers circling the financial system.
John Embry: “Eric, last week was interesting when you tied together a number of developments that occurred. Deutsche Bank publicly acknowledged its manipulation of the silver fix. But this is just the tip of the iceberg considering the true scope of the manipulation in silver being conducted primarily by JP Morgan…
….continue reading the John Embry interview HERE
also:
The latest gold COTs are out and they are an absolute horror story, with Commercial short and Large Spec long positions having ramped up to multi-year extremes, which we can take to mean that the dollar is not going to crash its support in the 93 area and will instead rally.
While PM stocks have broken higher, gold has stubbornly refused to and has been dropping back in recent days to complete the Right Shoulder of what is believed to be a Head-and-Shoulders top, as we can see on its 6-month chart below. Once it breaches the neckline of the pattern it should plunge. This will not be a surprising outcome, as it is very rare for a parabolic blowoff move such as we saw earlier to be followed by continued advance.
The 6-year chart also shows why there are grounds for caution here. Gold has stalled out at the upper boundary of the channel shown, with its slow stochastic indicating that it is topping out…
Now we come to the latest COTs, where we see that Commercial Short and Large Spec long positions rose sharply again to new highs last week, just as gold marked out its Right Shoulder peak last Tuesday. Large Specs are “foaming at the mouth” bullish, but look set to end up like the Plains buffalo, with the Commercials, the Big Money players, set to kill them and skin them by the thousand.
Click on chart to popup larger clearer version.
The latest gold Hedgers chart, which is a form of COT chart that goes back further, shows that Hedger’s positions are at multi-year negative values, which again does not augur well for gold.
Chart courtesy of www.sentimentrader.com
The marked outperformance of PM stocks relative to both gold and silver has been due to them being grossly undervalued relative to bullion, but now this strong performance is believed to be leading many investors into the jaws of a trap. On its 6-month chart we can see how GDX broke out of its Dome pattern and advanced to new highs, which have not been confirmed by momentum (MACD). Although this chart still looks superficially OK, what we have observed above for gold and its COTs suggests that a bearish Rising Wedge might be forming in GDX, a suspicion that will be confirmed by a sharp breakdown from the converging channel soon.
As ever, the dollar is key, and it has been recent dollar weakness that has encouraged the PM sector recovery, as investors in the sector salivate over the prospects for a dollar breakdown and collapse, However, both the latest dollar and gold COT charts suggest that this is not going to happen – instead, the dollar looks set to rally soon. On its 2-year chart we can see that this year it has dropped back towards the key support level shown at the lower boundary of a potential top area. But the convergence of the downtrend channel and the oversold condition on its MACD and Slow Stochastic suggest that it is likely to turn up again soon, a process which may have begun last week. The big trading range may yet turn out to be a top, but first it looks likely that we will see another rally towards its upper boundary, which, needless to say, would not be good news for the PM sector.
The latest dollar Hedgers chart, while not exactly raving bullish, is looking a whole lot better than it did a year ago, and certainly indicates that there is scope for a significant dollar rally here…
Chart courtesy of www.sentimentrader.com
The Fed is now in a very unenviable position, having painted itself into a corner, and is reaping what it has sown. Its first priority is to do the bidding of its crony pals on Wall St and keep the stockmarket levitated by refusing to raise interest rates, but if it continues to follow this course the dollar is likely to crash the support shown on our chart and plunge, an outcome which will upset some very powerful people in Washington. Latest COTs are showing that Big Money is betting on the dollar rallying, which means that a rate rise is probably more likely than many are thinking.
Conclusion: gold looks set to have the rug ripped out from under it soon and drop hard, as the dollar rallies away from the danger zone.
related:
Miners Reach First Resistance Target but Continue to Outperform Gold
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