As you can see on the updated chart, the HUI has one level of chart support left before it retraces the entirety of its move higher from the late June/early July rally.
Wednesday, November 14, 2012
HUI Chart UPDATE
This is the evening chart update of the HUI after it was further shellacked during the afternoon hours of today's trading session when the S&P 500 broke down through its technical chart support level.
As you can see on the updated chart, the HUI has one level of chart support left before it retraces the entirety of its move higher from the late June/early July rally.
As you can see on the updated chart, the HUI has one level of chart support left before it retraces the entirety of its move higher from the late June/early July rally.
S&P 500 Drops through Support
The S&P 500 was attempting to hold near the low formed last week that came on the heels of the post-election collapse in the US stock markets.
It just so happens that the low was in the very near vicinity to the critical 50% Fibonacci Retracement Level of the entire rally of the late May/early June swing low.
It bounced away from that level yesterday but today, down it went.
The index is now poised to drop all the way to the next Fibonacci retracement level, the 61.8% level, or the 1340-1344 region.
Failing to hold there, it should retrace the entirety of the rally meaning that we could very well be looking at a drop through the 1300 level on down towards 1275 or lower.
The onus is now on the bulls to hold the next level of support at 1340 if they have any chance of regaining the near term advantage, which clearly lies with the bears.
It just so happens that the low was in the very near vicinity to the critical 50% Fibonacci Retracement Level of the entire rally of the late May/early June swing low.
It bounced away from that level yesterday but today, down it went.
The index is now poised to drop all the way to the next Fibonacci retracement level, the 61.8% level, or the 1340-1344 region.
Failing to hold there, it should retrace the entirety of the rally meaning that we could very well be looking at a drop through the 1300 level on down towards 1275 or lower.
The onus is now on the bulls to hold the next level of support at 1340 if they have any chance of regaining the near term advantage, which clearly lies with the bears.
HUI Under Intense Selling Pressure
EVer since Newmont and Barrick reported "less than stellar" earnings, (and that is being generous with my choice of words), the mining sector has not been able to shrug off the selling pressure coming from both disappointed bulls as well as opportunistic bears.
The technical posture of the market has deteriorated but if the index is able to stay above the former downsloping trend line which it took out in early September, the long term bulls will be okay.
It is not uncommon to see a market breach a trendline and then come back to retest it before moving higher. If we get such a test, it will prove whether or not the resolve of the bulls remains intact and whether they still see the mining sector as the strong value that they did a couple of months ago. I think it is an obvious statement that the Newmont and Barrick news shook their confidence in a big way.
There is a bit of chart support near 448. If that cannot stem the bleeding in the sector, the most likely target for the next support region arises near 440.
The problem that the sector has right now is that the disappointing earnings numbers, combined with strong weakness across the broader US equity markets, have given rise to that infernal ratio spread trade of the hedge funds, a trade which I might add has proven to be wildly successful for them even as it has produced massive frustration among the long-term oriented holders of these companies. It has also produced dramatic UNDERVALUATION of the shares in selective companies at times. This looks to be once again developing with the stubborn refusal of the Comex gold and silver markets to follow the shares lower.
This dichotomy between the shares and the metals cannot go on indefinitely however so something will eventually give. Either the metals will follow the shares lower or the shares are going to rebound.
given the fact that the S&P 500 is flirting dangerously with a critical support level, it is going to take a near Herculean effort on the part of the mining sector bulls to drive these share prices back higher. If we do get one of these "miraculous" rebounds in the S&P 500, especially in the last hour of trading, I would look for selling pressure on the mining shares to dissispate.
The technical posture of the market has deteriorated but if the index is able to stay above the former downsloping trend line which it took out in early September, the long term bulls will be okay.
It is not uncommon to see a market breach a trendline and then come back to retest it before moving higher. If we get such a test, it will prove whether or not the resolve of the bulls remains intact and whether they still see the mining sector as the strong value that they did a couple of months ago. I think it is an obvious statement that the Newmont and Barrick news shook their confidence in a big way.
There is a bit of chart support near 448. If that cannot stem the bleeding in the sector, the most likely target for the next support region arises near 440.
The problem that the sector has right now is that the disappointing earnings numbers, combined with strong weakness across the broader US equity markets, have given rise to that infernal ratio spread trade of the hedge funds, a trade which I might add has proven to be wildly successful for them even as it has produced massive frustration among the long-term oriented holders of these companies. It has also produced dramatic UNDERVALUATION of the shares in selective companies at times. This looks to be once again developing with the stubborn refusal of the Comex gold and silver markets to follow the shares lower.
This dichotomy between the shares and the metals cannot go on indefinitely however so something will eventually give. Either the metals will follow the shares lower or the shares are going to rebound.
given the fact that the S&P 500 is flirting dangerously with a critical support level, it is going to take a near Herculean effort on the part of the mining sector bulls to drive these share prices back higher. If we do get one of these "miraculous" rebounds in the S&P 500, especially in the last hour of trading, I would look for selling pressure on the mining shares to dissispate.
Secession Petitions Now Number over 610,000 Signatures
I will try to keep posting an occasional tally of the number of signatures on the ever-growing list of states from which secession petitions have been submitted.
Based on the rate of increase (Texas is closing in on the 100,000 mark), I suspect we will be up near one million before the week is out.
Based on the rate of increase (Texas is closing in on the 100,000 mark), I suspect we will be up near one million before the week is out.
Tuesday, November 13, 2012
Grain Prices Continuing to See Selling Pressure
Continued weakness in the grain complex is helping to keep pressure on the Continuous Commodity Index or CCI. There looks to be a change of ownership occuring in this complex with hedge funds bailing out of a sizeable long position and commercial interests obtaining long side hedge coverage.
We have this selling occurring not only in the grains, but also in the metals and the energy sector and some of the softs. This is providing some headwinds to the precious metals complex even with the equity market bulls trying their best to jam prices higher and prevent a further technically related sell off from deepening.
We have this selling occurring not only in the grains, but also in the metals and the energy sector and some of the softs. This is providing some headwinds to the precious metals complex even with the equity market bulls trying their best to jam prices higher and prevent a further technically related sell off from deepening.
Monday, November 12, 2012
US Dollar on the Receiving End of Safe Haven Flows
As much as it pains me to write the words, US Dollar and Safe Haven, in the same sentence, the rush into the Dollar is evident as the fallout from the US election, combined with fresh fears surrounding Greece and other parts of the EuroZone continues unabated at this point.
This is perhaps one of the main reasons that the big shorts over at the Comex have been able to thus far stymie the yellow metal near the $1740 level.
Note on the chart below that the US Dollar is working steadily higher after having managed a strong push through a heavy resistance level near the 80.50 region. It has now pushed to the 100 day moving average, a level at which we would expect it to encounter some profit taking by speculative longs in the market. However, the above mentioned combination seems to be preventing any serious long liquidation at the moment as traders are more interested in owning the Dollar, warts and all, than they are the Euro at the moment.
Note also that the 20 day moving average has now crossed firmly above the 50 day moving average which is also flattening out and now looks as if it too wants to turn higher. There is an additional bit of chart resistance coming in near the 81.75 level that might stem its advance should the bulls keep pushing it higher.
The point I wish to make here is that the broader US equity market is continuing to head lower as the election results have guaranteed a decidedly unfriendly business climate for the foreseeable future. I am writing this during the Asian session but the S&P 500 is trading lower and once again looks as if it wants to test that critical 50% Fibonacci retracement level of the rally beginning earlier this past summer. If the bulls cannot force a quick rebound as they did last Thursday, the index will more than likely drop to at least the 1343 level.
With some of the risk trades being removed, the US bond market is also moving higher shoving interest rates lower in the process. The long bond is back up in nosebleed territory as it is once again testing the all time highs. Clearly, the SLOWING GLOBAL GROWTH THEME is back into play, again, for the umpteenth time. It seems as if we are never to be rid of this damned incessant tug of war between the deflationists and the inflationists. Now that the US public has voted for 4 more years of the same crap, it is difficult to see any of this changing meaning we are going to have another 4 years of incessant volatility and more market madness as the Fed fights the forces of deflation.
This is perhaps one of the main reasons that the big shorts over at the Comex have been able to thus far stymie the yellow metal near the $1740 level.
Note on the chart below that the US Dollar is working steadily higher after having managed a strong push through a heavy resistance level near the 80.50 region. It has now pushed to the 100 day moving average, a level at which we would expect it to encounter some profit taking by speculative longs in the market. However, the above mentioned combination seems to be preventing any serious long liquidation at the moment as traders are more interested in owning the Dollar, warts and all, than they are the Euro at the moment.
Note also that the 20 day moving average has now crossed firmly above the 50 day moving average which is also flattening out and now looks as if it too wants to turn higher. There is an additional bit of chart resistance coming in near the 81.75 level that might stem its advance should the bulls keep pushing it higher.
The point I wish to make here is that the broader US equity market is continuing to head lower as the election results have guaranteed a decidedly unfriendly business climate for the foreseeable future. I am writing this during the Asian session but the S&P 500 is trading lower and once again looks as if it wants to test that critical 50% Fibonacci retracement level of the rally beginning earlier this past summer. If the bulls cannot force a quick rebound as they did last Thursday, the index will more than likely drop to at least the 1343 level.
With some of the risk trades being removed, the US bond market is also moving higher shoving interest rates lower in the process. The long bond is back up in nosebleed territory as it is once again testing the all time highs. Clearly, the SLOWING GLOBAL GROWTH THEME is back into play, again, for the umpteenth time. It seems as if we are never to be rid of this damned incessant tug of war between the deflationists and the inflationists. Now that the US public has voted for 4 more years of the same crap, it is difficult to see any of this changing meaning we are going to have another 4 years of incessant volatility and more market madness as the Fed fights the forces of deflation.
Look at what has happened to the yield on the Ten Year Treasury Note once again. If you want to know which side is prevailing in this battle between the deflationists and the inflationists, just keep an eye on this chart as it will tell you all that you need to know.
One last chart, it is a gold to S&P 500 ratio chart. It is evident which of the two has been the better long term investment. A rising line means that gold is outperforming the broader US stock market. The S&P 500 has outperformed gold during some brief intervals through a good portion of 2009 and especially in the second half of last year but since the middle of this year, gold has been holding up much better than the stock market.
Gold Stymied Once Again at $1740
Gold continues to attract more sellers than buyers near the $1740 level once again reinforcing that zone as the next important chart resistance level that needs to be taken out if the market is to have a legitimate chance of making yet another run to $1800.
At the present time, it continues to retreat with dip buyers planning their next point of entry. Keep in mind that a lot of guys were leery about chasing this market higher after it first collapsed in price about 10 days ago and then came roaring back after the US election. That sort of extreme volatility is enough to chase away even the most battle-hardened of traders.
There should be a pretty good floor of support as the market descends lower towards the $1700 level.
At the present time, it continues to retreat with dip buyers planning their next point of entry. Keep in mind that a lot of guys were leery about chasing this market higher after it first collapsed in price about 10 days ago and then came roaring back after the US election. That sort of extreme volatility is enough to chase away even the most battle-hardened of traders.
There should be a pretty good floor of support as the market descends lower towards the $1700 level.
Talk of an Amicable Divorce Picking up Supporters
Last week I penned a commentary noting what I believe to be an irreconciliable division growing within these DisUnited States of America. That division, in my opinion, cannot be bridged because it includes TWO MUTUALLY EXCLUSIVE political ideologies.
One consists of a vision of limited, Constitutional government, as bequeathed to us by our Founding Fathers, and which gave rise to the most free, most prosperous and most generous nation that this planet has ever seen or will likely ever see again.
This philosophy has at its core the ideas espoused by John Locke, namely, natural law and that which flows from it. I might add here that under this system, men are free to PURSUE HAPPINESS, not necessarily achieve it.
The other consists of a vision of an increasingly powerful and intrusive centralized government, patterned after the current European statist model, in which the idea of God-given, unalienable rights is a foreign and outdated concept. Under this model, the rights of the individual take a back seat to some current notion as to what is in the best interests of the majority of the people, which notion is of course to be decided by the current holders of political power.
The latter vision has as its roots the rallying cry of the 18th century French Revolution; "Liberty, Equality, Fraternity". Under this vision, government or the state exists to be the "GREAT LEVELER", removing inequities in wealth and producing EQUALITY amongst all the citizenry. Inherent in this theory is the concept that those who are wealthy have achieved their wealth and success at the expense of the wealth and happiness of others who are not wealthy. This is where the rise of class warfare and the pernicious theories of Marx have their origin.
While I understand how startling and how shocking it must be to some to hear talk of the dissolution of the Union, I am only stating the obvious - the two sides in this nation are in a state of near perpetual hostility towards each other because the ideas that they espouse are repugnant to the other side.
Instead of the melting pot, "E Pluribus Unum", (out of many, one), America is being Balkanized along lines of ethnicity, class, gender and a host of special interest groups. Public sector unions are now clearly pitted against those whose taxes pay for their salaries and benefits causing further resentment and further fueling the flames of resentment against their feeding at the public trough.
Time constraints prevent me from further detailing the growing divisions in this nation but suffice it for now to say that more and more there is talk of an amicable divorce between the various states in this union. This is not something to be taken lightly. Can anyone imagine this sort of thing a mere 20 years ago? Talk of separation is a last resort, an idea born out of complete frustration. Even at that, amazingly, there are now TWENTY separate petitions from the citizens of TWENTY SEPARATE states to the White House requesting a peaceful separation from the Union. Interestingly enough, by the White House's own rules, any petition reaching a required 25,000 signatures is required to be considered by a committee.
In the time that it has taken me to pen these comments, the petition from the state of Texas has already garnered another 400 signatures ( I am not that fast of a typist). The petition from Louisianna, which seems to have been the first of these petitions, is well on its way to reaching the necessary 25,000.
I think it can be safely said that these petitions will be given about 15 seconds of consideration by the current administration before being rejected but the mere fact that this sort of thing is becoming more acceptable to a growing number of citizens, is evidence that this nation is going down the same path that led to the breakup back in 1861.
https://petitions.whitehouse.gov/petition/peacefully-grant-state-texas-withdraw-united-states-america-and-create-its-own-new-government/BmdWCP8B
One consists of a vision of limited, Constitutional government, as bequeathed to us by our Founding Fathers, and which gave rise to the most free, most prosperous and most generous nation that this planet has ever seen or will likely ever see again.
This philosophy has at its core the ideas espoused by John Locke, namely, natural law and that which flows from it. I might add here that under this system, men are free to PURSUE HAPPINESS, not necessarily achieve it.
The other consists of a vision of an increasingly powerful and intrusive centralized government, patterned after the current European statist model, in which the idea of God-given, unalienable rights is a foreign and outdated concept. Under this model, the rights of the individual take a back seat to some current notion as to what is in the best interests of the majority of the people, which notion is of course to be decided by the current holders of political power.
The latter vision has as its roots the rallying cry of the 18th century French Revolution; "Liberty, Equality, Fraternity". Under this vision, government or the state exists to be the "GREAT LEVELER", removing inequities in wealth and producing EQUALITY amongst all the citizenry. Inherent in this theory is the concept that those who are wealthy have achieved their wealth and success at the expense of the wealth and happiness of others who are not wealthy. This is where the rise of class warfare and the pernicious theories of Marx have their origin.
While I understand how startling and how shocking it must be to some to hear talk of the dissolution of the Union, I am only stating the obvious - the two sides in this nation are in a state of near perpetual hostility towards each other because the ideas that they espouse are repugnant to the other side.
Instead of the melting pot, "E Pluribus Unum", (out of many, one), America is being Balkanized along lines of ethnicity, class, gender and a host of special interest groups. Public sector unions are now clearly pitted against those whose taxes pay for their salaries and benefits causing further resentment and further fueling the flames of resentment against their feeding at the public trough.
Time constraints prevent me from further detailing the growing divisions in this nation but suffice it for now to say that more and more there is talk of an amicable divorce between the various states in this union. This is not something to be taken lightly. Can anyone imagine this sort of thing a mere 20 years ago? Talk of separation is a last resort, an idea born out of complete frustration. Even at that, amazingly, there are now TWENTY separate petitions from the citizens of TWENTY SEPARATE states to the White House requesting a peaceful separation from the Union. Interestingly enough, by the White House's own rules, any petition reaching a required 25,000 signatures is required to be considered by a committee.
In the time that it has taken me to pen these comments, the petition from the state of Texas has already garnered another 400 signatures ( I am not that fast of a typist). The petition from Louisianna, which seems to have been the first of these petitions, is well on its way to reaching the necessary 25,000.
I think it can be safely said that these petitions will be given about 15 seconds of consideration by the current administration before being rejected but the mere fact that this sort of thing is becoming more acceptable to a growing number of citizens, is evidence that this nation is going down the same path that led to the breakup back in 1861.
https://petitions.whitehouse.gov/petition/peacefully-grant-state-texas-withdraw-united-states-america-and-create-its-own-new-government/BmdWCP8B
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