Timing & trends

Is the most hated bull market in history over?

Posted by Sol Palha - Tactical Investor

on Tuesday, 1 March 2016 19:37

An ounce of patience is worth a pound of brains.
Dutch Proverb

Throughout this bull-run, a plethora of reasons has been laid out to indicate why this bull should have ended years ago. Mind you most of those reasons are valid, but that is where the bucket stops. Being right does not equate to making money on Wall Street. In fact, the opposite usually applies.  The Fed recreated all the rules by flooding the markets with money and creating and maintaining an environment that fosters speculation. 

The reason this is the most hated bull market in history is because there is no logical reason to justify it.  In 2008-2009 volume on the NYSE was in the 8-11 billion ranges and sometimes it surged to 12 billion. Before that, every year, the volume continued to rise, this indicates market participation. From early 2010 volume just vanished, it dropped to the 2-3 billion ranges and even lower on some days.   Hence, all market technicians and students of the markets assumed that the markets would tank as markets cannot trend higher on low volume and that is where they erred. 

We were and still are in a new paradigm; the US government stepped in and started to support the market directly that is why volume dropped so dramatically. However as there were no sellers, the markets drifted upwards. Later on, they got the corporate world in on the scam.   They set up the environment that propelled corporations to buy back their shares by borrowing money for next to nothing and then using this trick to inflate t EPS (earnings per share), without doing any work or even increasing the profitability of the company.  

In between a few minor corrections were allowed to transpire almost all of which took place on ever lower volume, to create the illusion that there was some semblance of free market forces at play. The current correction is the only one since 2011 that is real in nature, and it could prove to be a precursor to a larger upward move. If you recall, the dot.com era, the markets corrected strongly in 1998, it looked like the end was near but then the NASDAQ had its best year ever in 1999. It had tacked on gains of roughly 100%.  The chart below highlights this dramatic reversal. 

 Nasdaq 2000

Finally, we also have something known as dark pools, this, in essence, allows institutions to purchase large blocks of shares without leaving any tracks. Dark pools now account for over 40% of all U.S stock trades.    Theoretically, it provides the government via the PPT (plunge protection team) an avenue to manipulate the markets without leaving any evidence of foul play.   

Game Plan 

The Fed is hell bent on forcing everyone to speculate, and that is why we have moved into the next stage of the currency war games; the era of negative interest rates.  Negative rates will eventually force the most conservative of players to take their money out of the banks and speculate.  This process will be akin to another massive stimulus and will provide the bedrock for another monstrous rally. 

Make a list of stocks that you would like to own and use strong pullbacks to add to or open new positions in blue chip companies or companies with strong growth rates.

  1. The good news for gold continues to flow, like water pouring over Niagara Falls. Please  click here now. The SPDR gold fund has seen strong tonnage inflows in 2016, with the fund now holding 777 tons of gold.
  2. The buy-side fun isn’t limited to gold bars. In America, gold coin sales are experiencing a huge resurgence. 
  3. To view the latest action on that front, please  click here now. Clearly, institutional liquidity flows into gold are getting stronger, and more influential bank economists are taking a positive view on the world’s “ultimate asset”. 
  4. Gold bear fundamentalists aren’t quite Dodo birds yet, but I think it’s only a matter of time before that happens.
  5. From a technical perspective, gold also looks very good. Please  click here now. Double-click to enlarge this daily gold chart. The target zone of the triangle formation is the $1320 area.
  6. Ironically, if the triangle pattern were to fail, that would create an even higher price target for gold. Please  click here now. Double-click to enlarge. If gold breaks down from the triangle pattern, it would create a bullish right shoulder of a large inverse head and shoulders bottom pattern.
  7. The target zone of that pattern is quite high, in the $1432 – $1523 area. What fundamental event could create a break-down from the triangle pattern now, and create that right shoulder? 
  8. For the probable answer, please  click here now. Indian jewellers are targeted by the taxation-obsessed government relentlessly, and they are launching strike action today.
  9. While that’s slightly negative for gold in the short term, I’ve predicted that Chinese investors would be “reinvigorated” by a decent gold price rally, and the current price action is exactly what the golden doctor ordered for that to happen.
  10. Please  click here now. Kitco News notes that UBS economists feel, as I do, that continued strength in the gold price is going to give Chinese investors more confidence about buying gold.
  11. Please  click here now. Influential Societe Generale (SoGen) analyst Robin Bhar also appears to speak quite positively about the actions of Chinese investors. 
  12. While gold stocks may be overbought on some short term charts, they are much closer to being oversold on longer term monthly charts. Please  click here now. Double-click to enlarge this long term monthly chart of the Dow.
  13. Technical indicators like RSI became “overbought” in 1995, in the Dow 4000 area, but the market continued to rise relentlessly for about five more years.
  14. The growth of China and India is likely a more powerful force for gold now, than the US middle class was for the US stock market in the 1990’s. 
  15. Regardless of how technically overbought they may become, gold, silver, and precious metal stocks can theoretically rise for many years, or even decades, as the growth of the Chindian middle class continues. 
  16. This is especially true in India, where gold is an integral part of the Hindu religion, and the country’s GDP growth rate could hit 10% in the next 24 months.
  17. I’ve predicted that this will happen, and usher in a global “bull era for gold”. As India’s gold-obsessed citizens lead the world forwards economically, the gold price can rise much like American GDP did in the 1950s.
  18. Please  click here now. Double-click to enlarge this magnificent GDX monthly chart. 
  19. GDX has broken a long term downtrend line, and it’s clear that the technical situation is far from overbought. I believe that Chindian demand will enable GDX to become overbought, and stay that way for many years, regardless of what happens in the West.
  20. Silver has not performed as well as gold has recently, but that should not be a concern for silver stock investors. 
  21. Please  click here now. Double-click to enlarge this weekly SIL chart. This silver stocks ETF has already rallied about 50%, even though silver bullion has barely moved. 
  22. Janet Yellen is very focused on the Phillips Curve, while I think most money managers erroneously believe she is focused on the US stock market. US inflation is already showing signs of ticking higher, and Janet believes that higher inflation will drive GDP higher, basis her Phillips Curve theory.
  23. If silver stocks have already soared about 50% while silver bullion has barely budged, I’ll ask global silver stock investors to “dare to dream”, and envision a much stronger rally if Janet is successful in her mission, as I’m absolutely sure she will be.
  24. If US inflation rises even modestly, SIL should reach $50 without much difficulty. In the medium term, a strong rally to key trend lines in the $30 – $32 area for SIL is a realistic scenario, and it’s my target! 

Mar 1, 2016
Stewart Thomson  
Graceland Updates
website: www.gracelandupdates.com
email for questions: stewart@gracelandupdates.com 
email to request the free reports: freereports@gracelandupdates.com

DOW Set For Bullish 2016

Posted by Austin Galt - The Voodoo Analyst

on Tuesday, 1 March 2016 15:00

Ahh, the Ides of March. This is a time when stock market participants get the heebie-jeebies and it is my expectation that the first part of the month will play into this superstitious claptrap. However, once an expected higher low is in place, then a big move to the upside will be witnessed that sees March end impressively in the green.

The January analysis outlined the expectation of a move down to put in a higher low. Bingo. The February analysis outlined the expectation of another downside test that puts in another higher low. Bingo again. In this March analysis, I’m gunning for the jackpot prize in calling for one final downside test to put in yet another higher low before price launches higher big time.

Let’s begin the analysis with the daily chart to get an idea of how I believe price is set to trade.

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….read more HERE

 

 

Value investing is what led Buffett to become the greatest investor of all time. He has, through his initial understanding of value investing, accumulated a collection of nearly 300 businesses spanning the globe. He has also amassed a significant fortune and more importantly, power. The same goes for Charlie Munger. With that power also comes an undoubted level of hubris, patriotism, and dare I say, statism.

Seasonality Super Cycle: January Barometer In The 4th Year Of The Presidential Cycle

Posted by Seeking Alpha

on Tuesday, 1 March 2016 14:55

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Summary

The negative January closes on U.S. equity indexes is an ominous sign for 2016.

In addition, equities traditionally struggle in election years.

We created seasonal indicators which give high-probability glide paths for trading 2016.

…read more HERE

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