Stocks & Equities

Stock Mania & Gold

Did Gold Start to Trade Along With the Stock Market? 

Based on the July 12th, 2013 Premium Update. Visit our archives for more gold & silver articles.

It seems that everybody’s hanging on the Fed’s every word. Yesterday the S&P 500 index climbed above the closing record of 1,669.16 reached May 21 and closed at its record high (1,675.02) as Ben Bernanke backed sustained monetary stimulus. 

The index has advanced for six straight days, the longest winning streak since March 11, and is heading toward its biggest weekly gain since Jan. 4. In this way, the S&P 500 erased losses since Bernanke first suggested the Fed might curb stimulus this year. 

Without a doubt, the U.S. Federal Reserve stimulus has helped fuel a rally in financial markets which spread across stocks and bonds to oil and metals. Many investors have jumped to rallying stocks and dumped holdings in gold-linked exchange traded funds.

“The story in stocks for this year is about confidence replacing uncertainty and anxiety,” Hank Smith, a chief investment officer at Radnor, said. “It’s really more about an improvement in sentiment. That’s being a big driver for equity returns and we are still a long ways away from worrying about there being too much optimism or exuberance.”

Could these events trigger another rally? Will the S&P 500 index climb decisively above the May 21 top? Before we answer these questions, let’s find out what happened during the last several days and check the current situation in stocks. At the beginning, let’s take a look at the long-term S&P 500 chart (charts courtesy by http://stockcharts.com).

radomski july122013 1

On the above chart we see that stocks moved back above the rising support line, which means that the breakdown below this line was invalidated. The recent decline was likely nothing more than another correction and the outlook is still bullish.

Now, let’s check if the short-time outlook is also bullish.

radomski july122013 2

During the past week, the S&P 500 Index has continued its rally. On Monday, we finally had a breakout above the declining resistance line based on the May and June tops. The following days brought further rallies. Another bullish factor was the breakout above the November-May upward trend line. The price climbed up over the area of the June 18 local top, and as we had previously mentioned, the S&P 500 index reached the May 21 closing record of 1,669.16 and closed at its record high yesterday. The next resistance level is at the May 22 high.

Let us move on to the financial sector, which often leads the general stock market, for more clues regarding the future moves of the S&P500 – we’ll use the Broker-Dealer Index as a proxy here.

Screen shot 2013-07-12 at 6.19.40 AM
 

In this week’s Broker-Dealer index chart we see that the financials broke above the resistance level at 130. This could fuel further gains in the stock market. Please keep in mind that the financial sector used to lead the general stock market lower and higher so the bullish sign here is also a bullish confirmation for other stocks. However, the breakout has not been confirmed so far, so the situation improved just slightly.

Summing up, the situation for stocks in the long and short term is quite bullish, and it seems that we could see further gains in the stock market. If you’re interested in short-term commentary on the stock market, please note that we have started publishing such in our Articles section.

Once we know the current situation in the stock market and the financial sector, let’s take a look at the Correlation Matrix. This is a tool, which we have developed to analyze the impact of the currency markets and the general stock market upon the precious metals sector (namely: gold correlations and silver correlations

Screen shot 2013-07-12 at 6.19.59 AM

The correlations between gold and the general stock market reminded us of a question regarding whether we felt gold was starting to trade along with the stock market. This may seem to be true this week, but we doubt this will last. The very short-term coefficients are basically non-existent, the short-term are positive but weak, and the medium-term ones are negative and stronger than the short-term positive ones. The situation overall is mixed, but the negative correlations prevail in our view. It seems that if stocks rally 

in the medium term (which is likely), this will probably have a negative impact on precious metals, not only on gold but also on silver and the mining stocks (note an analogous situation in the Silver / S&P and HUI / S&P rows).

Summing up, the situation in the general stock market improved this week. The short and long term outlook is quite bullish, and it seems that we could see further gains in the stock market. For those looking for bullish implications, it might seem that gold started to trade along with the stock market last week, but we doubt this will last. It seems that the impact that the stock market has on gold, silver and mining stocks is still bearish.

To make sure that you are notified once the new features are implemented, and get immediate access to our free thoughts on the market, including information not available publicly, we urge you to sign up for our free gold investment newsletter. Sign up today and you’ll also get free, 7-day access to the Premium Sections on our website, including valuable tools and charts dedicated to serious Precious Metals Investors and Traders along with our 14 best gold investment practices. It’s free and you may unsubscribe at any time.

Thank you for reading. Have a great and profitable week!

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Gold Trading and Gold Investment Website – SunshineProfits.com

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About Sunshine Profits

 

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

 

Financial Hope in Creative Destruction

Ed Note: Good News is out there! With all the bad news raining down its wonderful that someone has worked hard on uncovering all of the positive things that are going on in the world today. Read this article below if you want to read read something positive….

Financial Hope in Creative Destruction

“I get up in the morning,” our friend Juan Enriquez told us during an interview one day late in 2011, “I read the paper and see all the bad things going on with the debt, deficits, wars and the economy. Then, I step into a lab and see all the potential breakthroughs the scientists I work with are about to unveil.”

We began following Enriquez with a camera crew not long after theI.O.U.S.A. project had run its course. Among other eccentric pursuits, Juan helped finance the mapping of the human genome with Craig Venter.

During I.O.U.S.A., we kept hearing the tandem refrain “Deficits don’t matter” and “We’ll grow our way out of this.” We wanted to learn from entrepreneurs on the front lines… who, in fact, is going to help grow our way out of the debt crisis?

Enriquez’s greatest fear at the time was that the political world would overwhelm the entrepreneurs — and the financial markets they depend on — before their discoveries could get put to good use. In fact, Juan’s bipolar view — debt, deficits and war versus inspiration, innovation and achievement — inspired the theme of this year’s Agora Financial Investment Symposium in Vancouver: “The Tale of Two Americas.” 

“When you look at the world,” a Symposium regular said, expressing a similar sentiment, “you see one contradiction after another. Cyber warfare, rogue political leaders, random acts of terror, the militarization of police and expanded surveillance equipment and drone usage make for a future resembling an Orwellian nightmare.”

“But at the same time, you can track breathtaking technological breakthroughs in oil exploration and new technologies that will revolutionize our health care, computing, automobiles, communication and agriculture… the many items we use every day.”

China is one such contradiction. They are in an economic slump. But despite the mandarin bear market, China’s innovators are making leaps and bounds. By 2015, they will graduate 17,000 postdoctoral fellows in science, math and engineering. That’s a 60% increase from 2010.

3dp 2415448bThe Chinese are building supercomputers that rival IBM’s and 3-D printers big enough to print airplane wings (the Aston Martin was 3D printed)! They have also granted 217,000 patents last year — a 26% increase in the past two years alone.

The German economist Joseph Schumpeter famously observed a similar bipolar disorder during the great credit bust of the 1930s.

“Lack of outlets, excess capacity, complete deadlock,” he wrote in Capitalism, Socialism and Democracy, “in the end regular recurrence of national bankruptcies and other disasters — perhaps world wars from sheer capitalist despair — may confidently be anticipated. History is as simple as that.                                                                                                                          

“The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation — if I may use that biological term — that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.”

In his day, Schumpeter witnessed the triumphs of radio, frozen food, the gas stove and the traffic light — all technologies we currently take for granted. But his observations of “how” these innovations come about remain as relevant today as ever.

“Existing structures and all the conditions of doing business,” Schumpeter concluded, “are always in a process of change. Every situation is being upset before it has had time to work itself out. Economic progress, in a capitalist society, means turmoil.”

In an ideal world, entrepreneurs, innovators, the risks takers, would be free to embrace the turmoil at their own peril. But no… in the real world, we have the meddlers, the world improvers, (ahem) bureaucrats.

Recently, the Supreme Court ruled lawsuits against generic drug producers. “The nation’s most widely used medications,” reports the LA Times, “generic drugs, now carry a legal side effect: If you’re badly injured by one of them, you can’t sue the manufacturer.”

The seen effect? Generic drugs will stay low-cost. And the unseen effect? Good luck finding recourse if you swallow a pill from China that you think is Viagra but is really filled with yellow highway paint. Yes, you read that right — supply chains for drug companies are badly tainted.

Good luck finding a fix within the political system. Our money is on new entrepreneurs staying 10 steps ahead of the suits in D.C.

Supply chain for your generic drugs tainted? No problem, use plant-based DNA. Labor costs too high? No problem, 3-D print your products instead. Money too controlled? No problem, buy Bitcoin anonymously.

The list goes on.

Now is the time to invest in those little companies that will make these advancements possible.

As you read more Tomorrow in Review episodes, you’ll understand why we place our confidence in the entrepreneurs… instead of the “talking-head, sound-byte” politicians who annoy you every Sunday morning.

Regards,

Addison Wiggin
For Tomorrow in Review

Ed. Note: Anti-counterfeiting plant DNA… 3-D printing … encrypted digital currencies… all of these are paving the way for a better tomorrow. The trick is finding those technologies on the “tipping point” — the ones that translate into financial opportunities that can transform your life.

In a free and new and improved report, we outline six money-making events that could transform your life, regardless of how much you invest.

Click here to get access to this bleeding edge research, before the mainstream catches on!

Thank you for reading Tomorrow in Review. We greatly value your questions and comments. Click here to send us feedback:tomorrowinreview@agorafinancial.com

 

 

 

 

The stock market is rising to record highs after Federal Reserve Chairman Ben Bernanke said the central bank would continue to support the U.S. economy.

The Dow Jones industrial average was up 141 points, or 0.9 per cent, to 15,432 shortly before noon Eastern Daylight Time Thursday.

The Standard & Poor’s 500 index rose 17 points, also 1 per cent, to 1,670.

The early advance put the Dow and S&P above their previous record closes set in May.

All 10 industry groups in the S&P 500 rose, led by materials companies.

Investors also bought bonds after being reassured that the Fed was not in a hurry to pull back on its huge bond-buying program.

The yield on the benchmark 10-year Treasury note fell to 2.60 per cent from 2.63 per cent late Wednesday.

Screen shot 2013-07-11 at 9.13.10 AM

Market Has Rebuilt Bullish Base

Reaction to Fed Minutes

Sometime between late Wednesday and mid-day Thursday, we should get a read on the market’s true reaction to the minutes from the last Fed gathering. At some point, the market will take a breather for a day or two in the form of a pullback. If the Fed minutes serve as the catalyst, the recently cleared downward-sloping blue trendline below may act as support.

July102013SPXSupport

It seems unlikely the markets will swoon for an extended period due to any tapering-related comments in the minutes. From Reuters:

Peter de Bruin, a senior economist at ABN Amro, said he expected the minutes to show a consensus forming at the Fed to start scaling back its $85 billion-a-month stimulus program in September, following a recent pick-up in U.S. data. “I think we have already seen the main fireworks from the Fed’s intentions to taper (scale back stimulus),” de Bruin said. “I would be surprised if we saw another strong rise in yields.”

……read more HERE

 

 

 

 

 

 

 

July and the “Traditional Summer Rally”?

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Champion (1938-39) gives the saying, “Sell in May and then go away,” as a proverb from the British Isles, commonly heard at the “Stock Exchange.” From what we can discern, it has become popularized in the financial press due to the efforts of Yale Hirsch over at Stock Traders Almanac. In fact, our own research tends to confirm its accuracy.
          Based on the Dow-Jones Industrial Average, the month of June has seen declines in 35 of the 52 years (67%) since 1961. Furthermore, August, June and September consecutively rank as the worst performing months of the DJI since 1950. We find it fascinating…..

…..read more HERE