“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput






Tuesday, July 1, 2014

Manufacturing Data Shows Modest Growth

"Modest" seems to be the key word to describe global manufacturing growth at the moment. Overnight data out of China and Europe, and then this morning in the US, shows readings above the 50 level ( over 50 is expansion; under 50 is contraction) but nothing spectacular. Equities in particular seem to welcome that news as it is a perfect environment for the bulls - growth, but not fast enough to kick up serious inflation worries. As I type these comments, the S&P 500 just scored another all-time high and the Russell 2000 is once again knocking on the door of its best print ( so much for this index showing signs of fatigue - see that previous post of mine last week).

Copper is not quite sure what to do with the numbers. While copper bulls are glad to see the stronger data, copper bears are of the view that the growth is not fast enough to sustain significantly higher prices for the metal. It did manage a breakout above that resistance zone on its chart and notched a nearly 4 month high today but it appears to be a bit hesitant to extend strongly higher yet. One gets the idea that while sentiment towards copper is markedly improved, that folks are wondering just how much strength in the global economy there is. It may have to wait until this Thursday when we get the payrolls numbers before it makes a bigger move.

For now, while traders may not feel confident enough about it to chase it higher, they look to be ready to buy dips. Chinese double counting and triple counting fears seem to be well in the rear view mirror at this point.


It is interesting to note the action in crude oil in today's session. Brent crude liked the manufacturing data, especially from China, and WTI did as well, but it has faded nearly $1.00/bbl as I am typing these comments up. As I was going over the last COT reports for crude this past Friday, I noticed that the massive, net long position of the hedge funds had been whittled back somewhat. While sentiment towards crude among that group was still extremely bullish, they were pulling some money off of the table. I am watching this closely to see if they will come back in with fresh money at the start of this new month or if they are content to take profits on subsequent rallies higher.

For now, price has stalled up near $107.50 and has retreated to the point of the previous breakout, namely the $105 level. Support extends down from this level towards $104.50. Thus far the market is showing no signs of breaking down as support is holding but with that very large hedge fund long position in this market, any break of a chart support level will get mighty interesting, might fast. Price could fall, in the event of a bout of long liquidation, as far as $103.50 or so and do no damage to the bigger uptrend.




Crude's behavior, along with copper, should tell us a great deal about what big-monied speculative interests are thinking in regards to global and domestic growth.

Grains and beans continued moving lower today. Yesterday's crop condition reports were just icing on the cake as far as the bears were concerned. That earlier report showing the stunningly large bean acreage set the tone and it has been negative since. The corn condition actually got even better ( 75% Good/Excellent) in the conditions report yesterday afternoon.

The chart scored a near 5 month low today.



Finally! We finally got an updated number from the GLD holdings yesterday. It showed a nice influx of some 5.05 tons of gold since the last updated number. That is a nice "positive" strike three. I mean by that, you had the gold price moving higher yesterday, the mining shares moving higher and the GLD showing an increase of 5 tons. That is exactly what one wants to see if they are a gold bull. That, plus the fact that the US Dollar index fell below 80 on its chart.

Gold moved higher in spite of the fact that crude oil moved lower yesterday and the grains imploded. That is even more impressive.

As far as today's price action goes for the yellow metal, it is attempting to break through and away from this resistance zone noted on the chart. Like copper, the market appears to be pausing here to evaluate the current price level. Bulls appear hesitant to get too aggressive while bears are trying to dig in.

If we get a clean push past the top of this zone, the next target is up near the $1360 level. If that were to give way, $1390 comes into play.



I am closely watching the ADX and some other indicators to see whether this market is going to reverse here or will extend. Ranging indicators are near overbought levels commensurate with moves lower in price. However, and this is important, bulls need to push price up to get us to move away from the range trade indicators to the trending indicators. They have not done that yet ( they are close however).

Price could fall back towards $1305 - $1306 and still be okay but bulls would not want to see that fail or it would portend a deeper retracement lower, especially if the market were to lose psychological support at $1300.

For now we wait. Longs - stay sharp here and be alert. One wonders if yesterday's big buyers will return right away or will wait for a dip lower.


47 comments:

  1. Pretty good spelling, Steve!



    QUESTION: Marty; Great call on the gold again. The June low was spot on. At the Conference you warned we could still make another pass at the lows in dollars in 2015 but this would be a delicate ballet between the varied trends in currencies. Do you still see this as a possibility?

    Best regards;

    HP

    ANSWER: Yes. June was the perfect target both seasonally as well as being 34 months from the highest monthly closing.In spot. We still have the seasonal June low in 2013 whereas in nearest futures the low is remains December 2013. So we do not have a low UNDER 2013 as of yet and until we get a monthly closing ABOVE 1550, we must respect that new lows in dollars are still possible especially if we get a real surge in the dollar until the markets regroup.

    The report on the metals group is being edited now. We will include some stocks as well.

    ReplyDelete
    Replies
    1. Jasper in addition to JS's missives I thought this was interesting how Jim fired David Duval for taking too long to check accuracy of PR's for TRX in his battle against the shorts:

      http://www.siliconinvestor.com/readmsg.aspx?msgid=28570383

      Wonder if this is the brother of Dan Duval - webmaster at JSmineset??

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    2. "A closing for the month on a Nearest Futures basis tomorrow below 1251 should result in the sharp decline. A monthly closing BELOW 1192 will warn serious of a sharp decline that will more than likely break the $1000 level. C A U T I O N is highly advised." - Martin Armstrong, 29th may 2014.

      The close under 1251 occured.
      The "sharp decline" consisted of a 10 points drop before the rallye.
      Those people are good at one thing, just as Alan Greenspan : write one thing and its opposite in the same sentence, so that whatever happens, they only have to produce the one half they need and remind you how right they were.
      The "june low" happened 2 days after his forecast.
      There was no sharp decline.
      This, Mr Armstrong will remember never to remind you.
      Period.

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    3. Hubert;

      You and I need to get into the newswriting business. We would make so much money that we could afford to buy a bottle of the best French wine out there and send a complimentary bottle to everyone who posts on the blog here!

      Here's what I do know... yesterday hogs went limit up; today the August just missed limit down. I learned a long time ago to get out of the prediction business as I have no idea what these computer driven markets are going to do from day to day, much less from week to week.

      Anyone who claims that they do, is full of bull excrement. I can tell you one thing they do not do, and that is trade with their own money.

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    5. Dan, for a few of those ones, I'm ready to write anything you want :)

      http://www.lsa-conso.fr/produits/henri-jayer-richebourg-grand-cru-cote-de-nuits-bourgogne,147672

      Let's find some nice french cheese as well...

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    6. Hubert;

      I can't read French but it looks like the English translation of the label on that wine bottle is: "Damned good wine!".

      Delete
    7. How about happy birthday Canada

      Delete
  2. Related, likely. Much of the press releases and pr and management statements since 2005 have been false and misleading. Btw, Joseph Kahama sold 5000 shares couple days ago. Its not much of a value investment appearently. The only thing i dont understand is why jim sold his farm to the cfo for half the asking price. Maybe protection against liability suits.

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  3. This comment has been removed by the author.

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    1. Fantastic now we await confirmation by russell before we bet the farm.

      Delete
  4. 65 Week Moving Avg broken on Gold also...mentioned on KWN and by the Aden Sisters in the last 24 hours...

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  5. Jasper/and or Hubert; Did Spellcheck Armstrong buy the dead nuts low in gold or get caught selling it in the hole under 1251 on a close? He can not have it both ways even though he is a letter writer???

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    1. lool steve, have you been reading my mind or is this telepathy? Look at what I was writing above at the exact same time you were writing your post lol :)

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    2. Yes Hubert, it is really pretty sad about these donkeys. They get it right about as often as monkeys fly out of my ass. sparks of course

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    3. Well if you change your mind, there will be Q&As in august september october and november you can attend.

      Delete
  6. Non-diplomacy 101...

    "Vladimir Putin accuses the U.S. of blackmailing France to scrap a contract to sell Russia Mistral warships by offering to cut a record $8.97 billion fine against BNP Paribas."

    Sounds about right maybe.

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  7. H'mm...Iran says it has no plans nor do they have any troops within Iraq currently.
    We shall see about that.

    "Iran says ready to provide Iraq with arms to fight 'terrorism'"

    By Gabriela Baczynska
    MOSCOW | Tue Jul 1, 2014 8:31am EDT

    By Gabriela Baczynska

    MOSCOW (Reuters) - Tehran has not received a request from Baghdad to supply it with weapons but is ready to do so if asked, Iran's deputy foreign minister said on Tuesday during a visit to Moscow.

    Hossein Amir-Abdollahian said that Tehran had no plans to send troops to back government forces fighting the Sunni "terrorists" of the Islamic State in Iraq and the Levant (ISIL), who have captured swathes of Iraq as well as Syria.

    "We have no troops or armed forces on Iraqi soil now," he told a news conference in comments translated into Russian. "We have no plans to send troops to Iraq.

    "Iraq has came up with no request to get arms from us. But if it does, then, within the framework of international law and rules as well as bilateral agreements, the arms that Iraq needs to conduct an effective fight against terrorism will be provided," he said.

    Both the United States and Shi'ite Iran oppose the militants' onslaught. But Abdollahian accused Washington of being behind the recent developments.

    "What has happened in Iraq recently is clearly a result of foreign meddling, a plan by the United States. The Americans want to create a second Ukraine in Iraq," he said, referring to the conflict between government forces and pro-Russian separatists in east Ukraine.

    The United States has dispatched military advisers to Iraq to support Baghdad and Russia delivered five Sukhoi Su-25 fighter jets late on Saturday.

    Speaking after talks in Moscow with Russia's Deputy Foreign Minister Mikhail Bogdanov, who is also the Middle East envoy of President Vladimir Putin, Abdollahian said Tehran's current support to Baghdad was limited to "consultations".

    He ruled out any cooperation with Washington on quelling the ISIL, which over the weekend declared a "caliphate" to rule over all the world's Muslims, saying it was using the group to try achieve its goals in the Middle East.

    "The ISIL is a product of U.S. policies in Syria," he said of the conflict that started in early 2011. Moscow and Teheran support President Bashar al-Assad against Washington and the West, which have sided with opposition and rebel groups seeking to oust him.

    Russia on Monday warned the United States against bolstering support for moderate opposition in Syria, saying any support would in fact end up in the hands of the ISIL, an al Qaeda splinter group.

    When asked to comment about the prospects for the Kurdish minority seeking to carve out an independent state for itself amid the turbulence in Iraq, he said: "We are strongly against the partition of Iraq."

    Abdollahian said he did not expect the situation in Iraq and criticism of the United States to negatively affect international talks on Iran's nuclear program.

    Reuters.com

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    1. Thanks for the view from the other side of the street.
      The politicians sound the same though.

      "Your bad I good"

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  8. Anybody watching To Catch a Trader right now on Frontline?

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  9. So did I hear correctly?

    Did General Jim sell his farm in Sharon, CT at such a steep discount?

    Maybe he got margin called on TRX and had to raise some cash.

    No wonder that stock can't seem to get out of its own way. Still trading under $2.25 yet Buffalo Wild Wings is now at $165, up huge from a low print of $35 back in 2011.

    Now, if only General Jim would have gone "all-in" on BLWD, he could have sold his farm and bought a penthouse on Park Ave. next to Jamie Dimon, Sandy Weill, and Lloyd Blankfein

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  10. http://www.marketwatch.com/story/fighting-steps-up-after-ukraine-calls-end-to-truce-2014-07-01

    Just like the interpretation of the Bear of Anton Chekhow by any non russian drama theater company shows how little they know about that play (why never at RADA in the UK have they asked themselves why is the hero and the whole play called the Bear in the first place? Do their heroes look like a bear in character or an english lord with powder covered face?), it seems that western interpretation of Putin making peace moves regarding Ukraine (cancel russian parliament decision to authorize military intervention) may be misplaced.
    Putin reminds me much more of Smirnov (the Bear) than of James Bond, as I have read in a thousand silly newspapers from the west. Smirnov as Chekhov saw it, of course.
    A bear is the most feared animal in a circus, because you never see it coming. It doesn't send any signal of anger nor any warning when it is about to strike its tamer.
    Just so, I'm afraid Russia will try everything to show its good will in the ukrainian case, until the moment it will change its mind and invade. That moment will come most probably as a total surprise for everyone. I hope I'm wrong.

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  11. This comment has been removed by a blog administrator.

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    1. CAPITALSTARS is a shitty website with lousy forecasts feeding on number of visitors and viewed pages. It's maintained somewhere in India where the salary cost for such spammers as Shikah is worth asking them to spam every website seeking for idiots who will click on their link.
      Indeed, it is cheaper than advertising, and noone in his right mind would waste time watching another Bullshit financial news forecast website such as Capital Stars.
      It is funny they dare advertising here, because all they achieve is to show the difference of quality between Dan and this forum and BS forecast website such as Capital Stars.
      Let's remember together this name : Capital Stars.
      A website of fraudsters who don't mind posting here uninvited to try to advertise for their stupid cheap content website.
      From that initial policy, what does it tell to readers about the quality of their forecast? lool.
      CAPITAL STARS, the website which is shooting itself in the feet by posting here.
      Hey Shikah Donk, noone is going to click on your link, so you won't get your stupid incentive.
      I guess some curious will unfortunately go an check your stupid website and waste their time there, encouraging you to keep spamming our nice forum.
      So I will post this again every time you do it.
      To all readers, please don't encourage those assholes.
      Don't click on CAPITAL STARS link.
      Instead, make sure you remember the name as one of the Top Fraud website for dummies.
      Regards, Shikah and good luck.

      Delete
  12. I can't believe the balls of this guy Bo Polny.

    "Dear Gold Friends,



    No Gold final June price rise came on either June 26th or the 27th; but arrived on…"

    Translation... I called the top once on 26th june. I was wrong.
    I called the top again on 27th june. I was again wrong.
    No matter, I'll do it again until it gets right!!
    HAHAHA...
    And for such a crap system, because you may start thinking it's not worth your money, I'll make you a nice discount, here, listen to the small amount I'm asking for my lousy advice :

    "$13,000/YR
    Price: $20,000/YR
    INITIAL PAYMENT: $1000 (First 60 Days)
    MONTHLY PAYMENT: $1200"

    Just UNBELIEVABLE!
    But a few stupid rich guys in this planet paying that "analyst" can already make him richer than most day traders.
    Can you imagine paying that donk 20.000 $ a year!!! for this crap??
    See ya Bo,

    ReplyDelete
    Replies
    1. Hubert Du Haut,

      All I can say is...are you prepared yet?......Acclaimed money manager Stephen Leeb has informed all of us via KWN that the Chinese are going to push the price of silver over $100 and gold into the "stratosphere".

      Delete
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  14. Jim and Hubert, between Loser Leeb, Bo, and worthless ADP reports, and don't let me leave out these Indian parasites, you just have to shake your head.

    ReplyDelete
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    1. lol yes steve, they are everywhere, you can't ignore them :)

      Delete
  15. good from scotia: The next key level is 1334, the 61.8% retracement of the
    March to June decline, and also a past key resistance level (March 21 close and March 24 high).

    the demise of the us dollar is being hyped like crazy again, so it looks like the dollar bottom will come in next week.. usd will correspond to a top in the eur/usd, with many sellers waiting 1.3750 to 1.38.

    our long market closure 3.5 days can keep gold supported and the dollar down thru the weekend, but really gold isn't impressive. one day move after fomc decision then boring ever since.

    could call gold a failure yest. on the wyckoff model, as it went over the previous high 1331 on lower volume, and closed below. keep powder dry thru the long weekend is prudent and trade the USD reversal when it comes!

    cheers!

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  16. Some interpretation of the COT reports and question to Dan :)

    "First of all, on its 5-year chart, we can see why gold is at an important juncture here, because it has arrived at resistance at the downtrend line in force from late 2012. This is why the explosion in Commercial shorts here is a very unwelcome development for bulls. Nevertheless the situation that has now developed may only require a relatively modest retracement that does not involve a breach of last year’s lows, as happened after the high Commercial short position in gold that had built up in mid-March...The reason why the sudden explosion in the Commercial’s short positions in gold and silver is such a negative development for the sector is simply because this is not what you expect to see at the start of an uptrend. Normally, an uptrend starts with widespread bearishness and skepticism on the part of the majority, which gradually eases as prices continue to march higher, but what has happened here is evidence that there is a large bullish crowd who have been waiting in the wings to pounce at the first sign of a major uptrend starting. The Commercials take the other side of the trade and the reason that their short positions have exploded is because the Large and Small Specs have suddenly bust out of the closet again and jumped in with both feet. These people need to be smashed before a sustainable major uptrend can get underway, and the latest data unfortunately shows that they are going to be." - CliveMaund , www.clivemaund.com

    Do you think he is globally correct?
    Have a nice day :)

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  17. Hubert,
    Hubert,
    I understand your feelings about Bo, but Clive Maund based on what I read from him is impossible to follow. Wildly bullish to the sky is falling in a minute. I have seen him do this many times. Smart he is but following him very difficult. Of course I am not a subscriber so what do I know. Still the guy is all over the place.

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    Replies
    1. Concord, by now you should know that these donkeys couldn't throw rocks into the ocean if they were on the beach. Enjoy your 4th of July weekend.

      Delete
  18. Well all I can say is that once again crude prices are dropping and the ebullient consumer is even more emboldened to spend.

    Ergo, IWM, XRT and XLY now flirting with the highs once again.

    After posting 41 headlines about how the sky was falling and a huge crash was imminent, KWN has now resorted to "Gold and Silver to 'da Moon" forecasts again.

    Yet, not a word out of squealing and squeaky John Embry or "I'm Delighted" Rick Rule, both of whom are busily trying to salvage their funds after massive redemptions.

    And poor General Jim is scheduling more Q & A sessions for the bluehairs, and chain posting more articles about Ukraine and Iraq which doesn't even matter to the stock market.

    Egon Von Greyerz, Paul Craig Roberts, and David Stockman faces must be turning beet red watching the stock indexes soar to new highs, day in, day out, most institutional investors now laughing at their ridiculous forecasts.

    Jim Rickards and Eveillard long gone from the scene in order to avoid embarassment and humiliation by even commenting on KWN.

    ReplyDelete
    Replies
    1. Mark, the least you can do is send Russell a new supply of water-proof bibs, as he is now calling for $150 crude THIS year. On a different subject it looks like we are shortly to test some important support levels in the longer end of the bonds.

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    2. Interesting. This is in line with my prophecy for 175+ oil for next year when the economy tops. Final hulkamania blow off top for energy before we move into the dark deflationary times post 2015.75.

      Delete
  19. Steve...

    To quote Bob Brinker again.....

    "Never Before Have So Many Been So Wrong, For So Long"

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  20. Hats off to Dan.

    Crude oil getting bludgeoned again, as the long specs are getting liquidated.

    Man, I got out of my UGA and XLE in the nick of time.

    Dan I will be donating generously once you install the "Donate Now!" PayPal button, LOL....

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  21. Hey, before everyone heads to the bar, here is another good one from Mark's buddies at KWN; this guy Grant Williams who is one of John Mauldin's buddies (John has more friends around the world than all of us put together) says that if there is a gold short squeeze that gold could go ballistic. Hey, sonny, if my aunt had balls she'd be my uncle. Come on please and get an original thought. sparks

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  22. Mark;

    I am a bit curious - I am wondering why that Donate button that I thought I had set up is not showing up on your view of the site. What browser or platform are you using? I might have to figure out if I am doing something wrong with it.

    Thanks
    Dan

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  23. Fwiw Dan, I'd put another button just below the comment area.
    It can't hurt.
    Good luck. }:^)

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    1. To be specific....in the area next to where it says "Links to this post"

      I can see the button fwiw and I'm using Google Chrome on my tablet.

      Delete
    2. Does not show on mobile version with iPhone. Have to go to view web version or use a real computer.

      Delete
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