Timing & trends
Seasonal patterns generally call for strength into April/May, but these same patterns also call for a potential downtrend into the Fall. The real question is that with so much time between now and April/May can the market push to new highs, despite the negative signal flashed by the January Barometer. With the Nasdaq now virtually back to new highs, I cannot dismiss that possibility. Janet Yellen’s testimony before the U.S. Senate is apparently delayed today due to weather, so the bulls have less to hang their hat on. Even though I remain dubious about 2014 being a bull market year, I’m not shorting this market until there is a renewed sign of a downturn and have focused my attention (as always) on individual trades and sectors. Recall I’ve been writing about this for over a year now that 2013 or early 2014 could end the bull market. If we take out recent lows in the SPX, downside potential is first 1680, 1627 and possibly 1480.
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Retail sales in the U.S. declined in January by the most in 10 months as inclement weather kept consumers away from auto showrooms and stores.
The 0.4 percent decrease followed a revised 0.1 percent drop in December that was previously reported as an increase, Commerce Department figures showed today in Washington. Themedian forecast of 86 economists surveyed by Bloomberg called for no change. Sales excluding automobiles were unchanged.
Some Americans stayed closer to home, limiting trips to car dealerships and malls, as colder-than-normal temperatures and snowfall gripped parts of the nation. Job growth and wage gains the last two months also slowed, indicating consumers may have trouble maintaining the pace of spending after the fastest increase in three years in the final quarter of 2013.
“It’s not looking good for consumer spending,” said Guy Berger, U.S. economist at RBS Securities Inc. in Stamford, Connecticut, and the top forecaster for retail sales over the last two years, according to data compiled by Bloomberg. “Even if you have some modest improvement in the pace of employment growth, that’s not enough to generate a huge improvement in income.”
Estimates in the Bloomberg survey ranged from a decline of 0.5 percent to a 0.4 percent gain. The reading for the prior month was revised from an initially reported 0.2 percent increase.
….get the details HERE
Before we get into tonight’s charts I would like to explain what my goal is right now for the precious metals complex. We never know 100% for sure when we have a bottom in place. All we can do is look at the charts and indicators and try to get the odds in our favor on when to make a move. For the short to intermediate term I think we have a decent bottom in place in which we can try to take advantage of a move higher.
The hardest part of getting on board for an intermediate move is in the very beginning stages. First you have to identify a bottom, in the case of the precious metals complex, and then you have to start buying. Think of these impulse moves as two steps forward and one step back. We have just had our two steps forward and today marks the point of a possible one step back. This is normal market behavior. Giving back some of your hard earned gains makes you feel uncomfortable and you get this feeling, in the pit of your stomach, that you must sell. If we are truly in an impulse move higher your mentality should be to buy weakness. When your in a trading range is the time to sell into strength not in an impulse move. These are two completely different techniques. Right now I think we have entered at least an intermediate term move in the precious metals stocks and that is how I’m going to play this move until something tells me different.
My experience has taught me to trade the intermediate term move and hang on for dear life when things start moving both going up and coming down. This is where the big money will be made IMHO. Those that try to trade in and out will get a few good trades off but will eventually get out of sync with the move and find themselves on the sideline when the heart of the move takes place. I know for a fact that this is already happening with some of our subscribers that decided to sit out the move in some of the 3 X long eft’s we’ve been buying for the intermediate term move.
This is the point where one has to decide on which type of trader they want to be. If you want to be a short term trader then you really need to be disciplined and follow your system to the letter. If you chose to be an intermediate term investor then you need to get positioned for the longer haul by buying your favorite precious metals stocks now. You need to have the mindset that there are going to be corrections along the way but you have the confidence in the trend to hang on. It takes a lot of discipline and courage to ride out these inevitable corrections but that is the only way I know to make the big bucks. With that said lets look at some charts and see what they maybe telling us.
Lets start by looking at a daily chart for gold that is showing us a potential inverse H&S bottom that is the second bottom of a possible much bigger double bottom that goes back to the June low. This is exactly where one wants to see one of these reversal patterns form. If you recall gold made that very small double bottom, in December, that is now the head portion of the bigger inverse H&S bottom. Note the little unbalanced double bottom that was made back in June of last year that started the bottoming process and the small H&S top that was made at the 1430 top which I’m labeling, for the time being, as the double bottom hump. You can see how important the 1430 area is going to be for our intermediate term move. Note the last two bars on the far right hand side of the chart that shows the price action for gold doing a ping pong move between the 150 dma and the neckline. This is a big deal folks. Its showing us two very hot lines right now, one that is resistance and the other support. As I’ve shown you many times in the past when a stock is trading up against an important trendline, that is acting as resistance, you often see a smaller pattern form just below that important line of resistance. A moving average is no different than a trendline as they both can act as support or resistance. What makes me think that gold will break above the 150 moving average is the inverse H&S bottom that is forming just below it. If gold does in fact break above the 150 dma that will be a very big clue that gold has some legs to run higher.
…for larger charts go HERE
This year is already a sharp contrast to 2013, when the overall stock market rose an impressive 32%. Following the recent pullbacks, the market only needs to shed about 5% more to meet the widely accepted definition of a correction (a decline of at least 10%).
It has been a while since stock investors have had to endure such pain, so further sell-offs may prompt many to seek safer havens — especially if a full-on correction materializes soon. Since bonds don’t generally offer much in the way of returns right now, investors who want to dial back risk but still make money should consider top-flight large-cap stocks with attractive yields.
You might think they’d be hard to find after the market’s long run-up, but they’re available — right under our noses, really. To spot them, just scan the list of stocks in the Dow Jones Industrial Average. You’ll quickly see the index’s top five dividend payers all have generous yields in the 4% to 6% range. And you should be able to count on them for attractive payouts for years to come.
….the next 5 HERE
“Five years and more since the successive collapse of the pillars of the American financial system ushered in our present dire ‘unorthodoxy’, it should be obvious that overabundant money is no substitute for a lack of genuine capital. It should also be readily admitted that artificially low interest rates cannot be guaranteed to overcome the many disincentives to entrepreneurship which currently exist. How else could it be in a world where the profit motive is so universally condemned? How else when any businessman worth his salt knows that he is being asked to spend his energies and pledge his future well-being in pursuit of customers who either themselves are not financially sound or who suffer under a government whose own straitened condition may, at any moment, seek to rob them of whatever wealth they have so far managed to preserve.”
Sean Corrigan, No zero bound on reason
Pound Powers Higher on Carney Quicksand
The Bank of England upgraded the UK GDP today. The pound rallied accordingly. Is BOE Governor Carney sending mixed messages? And if so, are his concerns valid?
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