Saturday, June 14, 2014
Here's a bit of stuff for reading this weekend:
Liz Ann Sonders - stealthy, silent and sustainable. Here's the summary:
US stocks should continue to move generally higher although activity may remain sluggish through the summer and the possibility of a correction is elevated as per both seasonal/election cycle tendencies and elevated optimistic sentiment. The U.S. economy should help support the market as signs are increasing that we may be entering the long-waited for self-sustaining expansion. The ECB's actions weren't game changing but are helpful and European equities look attractive, while we believe the worries over a Chinese slowdown are overblown.So turn off the TV, quit reading Business Insider and ZeroHedge, quit piddling yourself and just buy the damn S&P 500. Or as Liz says:
Worries about investor complacency, as seen in the continued low levels of volatility as represented by the VIX, soothe our concerns a bit, as the number of folks worrying about investors not worrying says to us that complacency may not be quite as high as thought.Though the people worrying about investors not worrying are the people desperate to sell eyeballs to advertisers. Ignore them.
BI - Bitcoin's doomsday scenario has arrived. OMG LOL STFU BRB! This is too fucking precious:
There is only way to hack the entire Bitcoin network, which has continued to hum along in the face of numerous Bitcoin business failures. It involves a series of group of Bitcoin miners taking control of 51% of the Bitcoin's processing power, thus giving them the power to confirm transactions that don't exist. Miners are simply computers that unscramble the encrypted series of numbers attached to every Bitcoin transaction. There is profit in numbers, and many miners have formed large pools to extract the maximum amount of profit for their work.So in other words,an unregulated free market in currency quickly turns into a monopoly! And hey! There's no pesky State there to intervene! Have fun watching your wealth evaporate before your very eyes, bitcoin idiots! Another failed libertarian experiment! When will these clowns realize libertarianism has never worked anywhere?
As a completely unregulated global currency made out of computer code, the only thing that has prevented the 51% threshold from being reached has been a form of mutually assured destruction: As soon as the 51% figure is reached, the price of Bitcoin will tank, leaving the digital junta little time to make much of a profit.
On Friday, mining pool GHash's share of the Bitcoin network ticked 51%.
Military Times - how did 800 ISIS fighters defeat two Iraqi divisions? If you want the real Iraq story, go to the military and not to the media. Basically, the Shiites pissed off the Sunnis too much, so now the Sunnis aren't interested in fighting for Iraq anymore. This is yet another lesson in the Riddle of Steel that the American politicians will fail to learn.
What is the "Riddle of Steel", you say? Oh my! Let unlikely sci-fi villain James Earl Jones explain it to you!:
Doesn't matter how much technology you have, you need to control the bodies that wield it.
BBC - Netherlands 5, Spain 1. Do they only play on half-fields in Spain? Those clowns looked utterly lost in their own end. I know the Dutch have always been a top team, but this wasn't even a competitive outing for Spain. Well, I guess this means Chile has a good chance to advance.
Friday, June 13, 2014
Mineweb - Eric Sprott says there's a gold shortage coming. Y'know, I have no respect for people who spend years being wrong just so they can eventually be proven right.
Especially when, in the process, they blow up all their clients' portfolios, destroy their company, and eventually get demoted to "cheerleader".
This screed reads like something written by a run-of-the-mill conspiracy theorist: he doesn't even put forward an argument. Not a one. He simply strings together a random bunch of assertions, based entirely on made-up bullshit that he's read on blogs written by uneducated fools who've never even been out of their basements.
If you listen to Eric Sprott, you deserve what you get. Even Sprott Inc. doesn't listen to him anymore, so why should you?
I mean seriously: even Russian stooge and propagandist Max Keiser mocks Sprott nowadays.
But let's give him an unfair hearing:
Here's some fun reading:
Calculated Risk - preliminary June consumer sentiment COLLAPSES!!! My god! Just look at the damage done to this chart!
Wait... what? You mean Zerohedge and Business Insider hyped up a result that is well within the chart's noise level? Why would they do that?
FT beyond brics - China bear with bull's horns. I'd care more about what Andy Xie has to say if he wasn't an idiot who's spent the last decade being wrong:
For those looking for signs China is headed for its own economic melt-down, look no further than uber-bear Andy Xie, a former colleague of Roach’s at Morgan Stanley.Let me translate the above for you: if you had spent the last decade listening to Xie, you'd never have made a penny off of China. So do you really want to start listening to him now?
For more than a decade, Xie, now an independent economist based in Shanghai, has been predicting apocalypse for the Chinese economy but in recent months something strange has happened.
Just as everybody else in the world, including senior Communist Party leaders, start to really worry about an impending Chinese crisis, Xie has strapped on a pair of bull’s horns.
According to Xie, the current property-led slowdown in China is “good news” and shows “China’s economy is finally ending its bubble addiction.”
Reuters - China ramps up spending to spur economy. I guess that's good for gold demand, innit? Let's see: a $50 billion extra stimulus, 20% vig to the local officials, 50% of the vig gets laundered in Macau, 50% of that buys a Toronto condo and the rest buys gold bars that get stashed at the downtown Toronto HSBC... how much gold is that?
Bloomberg - SEC finally figures out the Allied Nevada buyout offer was a pump-n-dump scam. And now all they have to do is find a Chinaman in China. Should be easy, right? Not that many people named "Chang" in China.
Some charts and opinions, heading into the weekend:
So GDX looks like it wants to take a breather. I dumped my HGU, half yesterday and half just now, as well as my Premier Gold, thinking things were overbought and it would be nice to take some profits.
Among other things, my favourite US & world ETFs are going ex-dividend next week and I want to buy back my positions - probably for cheaper than I sold them, if the DM equities keep backfilling for a while.
Looking at this chart this morning convinced me to do some selling: yesterday's GDXJ volume was highest in months, and it pushed GDXJ +3SD. That sort of move just begs to get sold into. It looks one hell of a lot like a completion.
The nice thing about the above chart is that GDXJ is still way above its old support at $35. That tells me you don't have to worry about GDXJ failing; this could perhaps be the start of a longer uptrend in the miners. Though I don't suspect it so much that I'm willing to hold a gold miners double-long or a +3SD junior through the weekend. After all, a backfill could still take it down to $36 without it being bearish.
So I've trimmed my positions down to just Rio Alto; I'm so far in the green on that one that I'm happy to hold through a bit of consolidation, especially since it's still fundamentally undervalued at $2. Oh and I still have a few short-date at-the-money warrants in this-and-that, just for excitement.
This chart will scare people who look at it - "oh, was all that gold price movement just an attempt to challenge its violated support?" GLD hasn't even filled the gap-down yet! So people won't want to hold miners through the weekend, especially since the dominant narrative is that gold only went up because of geopolitics.
But here's the key to reading the immediate future, I think:
As for the USA?
People are starting to buy downside protection again, and so the US market might still be consolidating for a while again. I'm happy that I caught much of the upmove from May's whining and sold the day after the top. I'd not be surprised for $VIX to come back down to its short-term EMA in the next couple days, then maybe fail upwards and spike +2-+3SD. At that point I'll assess the level of idiocy in the US financial media, with the intent of maybe buying back my US equities positions.
That is, I might, if the junior miners don't look more promising. Trading a three-month 5% gain in the S&P doesn't measure up to trading a one-week 20% gain in junior miners!
That's my opinion as of 10:30 AM. Note that this sort of market can change my mind in a heartbeat: it all depends on how silver, GDXJ, and VIX react intraday.
It's almost as if we're locked into Friedrich Nietzsche's "eternal return", living out our lives over and over again. Just wait long enough, and the entire world comes back to where it was.
Here's another supposedly lost and forgotten video of the early 90's, digitally preserved on the internet for all eternity, and fuck you to the smarmy fucking professor coont who accused the internet of being the eschaton of the ephemeron,* or whatever.
It's the Telescopes, with "Flying", a prescient ode to Rio Alto's stock price of the past week:
As a little bit of trivia, this video was directed by Douglas Hart from the Mary Chain.
* - If nobody else has taken the phrase "eschaton of the ephemeron", I hereby lay claim to it. It's too fucking cool to pass up.
Thursday, June 12, 2014
UPDATE: so as it turns out, Wynne won 59 seats, the Conservatives have something like 27, and thus the website threehundredeight.com was a total abject failure at predicting the election results.
Seriously. They said 25 PC seats was the absolute lower limit of possibility. A result of 27 makes this website look really bad. Back to the drawing board, guys! Your algorithm obviously sucks.
Thankfully, the people of Ontario realized what an utter clown Hudak is, and all the pundits and press have made fools out of themselves by taking that idiot's babbling seriously. I hope someday the media will figure out that they should quit giving exposure to utter idiots.
I'll leave the original post below, but you don't have to bother reading it.
at 4:01 PM
Al Jazeera - yup, there's tanks alright.
Ukraine has accused Russia of allowing three tanks and other military vehicles to cross the border into east Ukraine to help pro-Russian separatists there.
Russia did not immediately respond to the accusations on Thursday, but the Reuters news agency reported that three of its correspondents had seen the tanks in the border town of Snizhnye.
"We have observed columns passing with armoured personnel carriers, other armoured vehicles and artillery pieces, and tanks which, according to our information, came across the border and this morning were in Snizhnye," Arseny Avakov, Ukraine's interior minister, told reporters in Kiev.
He said Ukrainian forces had destroyed part of the column and fighting was still under way, but gave no further details.
at 9:49 AM
BBC - Kiev reports three Russian tanks have entered east Ukraine. Quote:
Mr Avakov said the tanks had crossed the border from Russia along with armoured personnel carriers and artillery pieces in the Dyakove area of Luhansk region, before moving into the neighbouring Donetsk region.
There, Ukraine's interior minister said, the tanks headed for the town of Snizhne on Thursday morning. Two then proceeded to the town of Horlivka and were attacked by government forces.
"The fight is under way," Mr Avakov said. "I cannot say about its final outcome, but part of this column has been destroyed."
Unverified video has been posted on YouTube of a battle tank rolling down a street said to be in Snizhne. The footage was shot from a flat overlooking the street.
No reaction yet in gold.
So last night I watched Josie and the Pussycats. Great movie! But today I check Ebert's site to read his review, and what do I see?
Ebert.com - Josie and the Pussycats.
He gave it one half of a star!
It's a fun, feel-good family-friendly movie about a rock band who get signed by an evil record company. The evil record company is working with the government on implanting subliminal messages in music, to control young people's minds. Josie and the Pussycats eventually triumph, the girl gets the guy, the government shuts down the evil programme, and there's a concert.
Now, I'm an aficionado of government conspiracy/mind control movies: everything from the Bourne films (pretty good) and Enemy of the State (utterly brilliant!) down to Control Factor (meh) and They Live! (tacky film but a story just begging for a big-budget remake). As far as GC/MC movies go, this one is great; it's funny and doesn't take itself at all seriously, but still provides anti-consumerist commentary that's way more fun than reading goddamn Naomi Klein.
And the acting actually wasn't that bad at all. Alan Cumming actually did a great job as the bad guy - Rowan Atkinson certainly couldn't have done any better. Tara Reid was cute dumb silly, but that's what the role was. Frankly, Ebert's crush Parker Posey was about the worst actor in this film.
And there were funny little "a-ha!" bits in the movie too. Really hilarious was the scene where Frame (the bad guy) met the one girl in the record store who was immune to mind control. And the twist ending was great.
And hey, even Seth Green is in the movie. And Carson Daly gets to play an evil Carson Daly (another highlight was the attempted murder of the Pussycats at Total Request Live).
The US puts out a lot of idiotic sophomoric garbage that pretends to be comedy; SNL alone is responsible for a load of utter bullshit. Josie and the Pussycats, while certainly a simplistic and cliched story, still played it awfully smart compared with most American teen comedy crap. It's a far less stupid movie than Borat, for example. I love it and will watch it again, not just because Tara Reid was a cutey.
And as for Roger Ebert?
"Subliminal" means "below the line". In the case of sound recordings, "subliminal" does indeed mean "below the threshold for conscious perception", Roger! Your "sub-aural" means either below the ear (in medical terminology) or below the minimum frequency for hearing (in audio terminology).
Pretty pathetic that he screwed even that bit up. It's almost as if Tara Reid pissed in his vodka, so he tried to go way the hell out of his way to find as much to criticize in this movie as possible.
Two newsbits for today, the synthesis of which might be interesting for you to ponder:
Reformed Borker (Bork Bork Bork!) - WTI crude breakout. Josh brings in the opinion of Peter Boockvar, a very shortspoken fellow who I kinda miss:
As most of the robust oil producing fields are far away from the violence right now, the immediate response is more psychological than anything but who knows where this goes. While of course this oil jump may not be sustainable if things calm, the rise in oil prices is also happening just as the inflation figures in the US have been ticking higher and Europe may get what it wants but for the wrong reason.Is that it? All of a sudden people are paying attention to inflation? Wow! Hey, Josh? I wonder, is there some sort of yellow metal that you buy to protect against that sort of thing?
Bloomberg - $460 billion bond shortfall will suddenly teach people about supply and demand. How the hell can anyone expect bond yields to go up?
The supply of bonds worldwide will fall $460 billion short of demand this year, underpinning support that confounded forecasters and sent the fixed-income market to its best start to a year since 2003.It's the Summers/Piketty Crisis of the Rentier Class. So what happens? Do they just move their capital into stocks, driving dividend yields lower? Or into real estate, driving another bubble?
Debt issued by sovereign, corporate and other borrowers will decline by $600 billion to a net $1.8 trillion in 2014, as demand reaches $2.26 trillion, according to New York-based JPMorgan Chase & Co., the world’s biggest corporate bond underwriter. Demand has pushed down average bond yields to levels unseen since May 2013 as economies slow, borrowing is reduced and central banks signal no rush to start raising interest rates anytime soon.
The imbalance helps explain why most forecasters have gotten it wrong this year when predicting bond prices and yields. The market received a boost on June 5 when the European Central Bank became the first major central bank to charge fees on deposits and unveiled other plans to support an economy threatened by deflation.
And hey: if inflation is going up, above Treasury yields, that makes yields negative. What happens to the gold price in that case, according to Wall Street Whitey's massively outdated and wrong but still oversubscribed thesis?
Here's a one-month GDX candle chart with sarcasm added:
A bork of long-term support is significant if it remains borked, or if it gets even more borked.
A bork of long-term support has the possibility of being mere bullshit if it happens entirely because of an OpEx smackdown of gold.
I distrusted it when it borked, I watched with patience from the sideline. I saw the volume pop on rising prices on Tues and Wed, and became more interested, because a bear flag isn't supposed to see increasing volume on increasing prices.
Over those 2 days I slowly switched out of XSU, VFV and ZUB, and into RIO and PG and HGU, and am now reaping the rewards. God forbid, I might actually be becoming a better trader, day by painful day.
Could still all end in tears of course.
All of a sudden, with the failed breakdown in gold, a bunch of miner charts look exciting.
The big proxy war seems to be launching this stock. PSDave thinks it's prelude to a forced buyout.
Here's Rio Alto:
The stupid buyout of Sulliden is no longer stupid, according to me and IKN, so all of a sudden Rio feels the lurve.
Even management's dumping of 3M shares the day before the announcement of an all-paper merger doesn't seem to be enough to keep them down.
Best chart of them all, because it's threatening to break above long-term resistance. Is someone about to buy Oceana or something?
I'm only asking cos there's been a lot of that buyout talk in the gold miner space (see above three stocks).
Making another charge at $2.60, though it's pretty darn overbought. Someone threatening to buy Premier or something too?
Y'know, it's almost as if Wall Street is spending this June portfolio allocation season rotating into miners, not out of them!
Here's the Transports:
It could drop to the SMA(50).
Then again, it could drop below the SMA(50), thus confounding all the people who spent the last month printing white candles.
No reason, it was just overbought. I doubt primary threats against Republicans who voted to raise the debt ceiling will cause the US to suddenly stop shipping goods across the country.
But at least now Joey The Weasel has something to help him get more clicks.
Wednesday, June 11, 2014
Mineweb - why investors should better understand the science of discovery. Wherein Cookie explains how to discover, or fail to discover, economic gold deposits.
Here's a pic from the article that he flogs to death at every single speaking engagement:
So we're not discovering any more gold.
Then again, production hasn't even started to drop off yet. In fact, China seems to constantly add to their production every year. So the drop-off in discoveries might not really have an effect on supply for a decade or two.
IKN will lurve this:
Japan thinks that England plays the second-most beautiful soccer, which just goes to show you that raw seafood really does inflict you with brain parasites.
Argentina is the only country that thinks Argentina will win, which puts them up with the USA in the running for "most self-centred country". Do they think Messi will single-handedly win every game for them? Oh, and they're also rooting against England, probably because of that whole Falkland Islands thing.
Russians think they have a chance to win the World Cup, which is yet more proof that they're living in a meticulously-constructed fantasy world.
Greece is rooting against Germany; Spain is also rooting against Germany. Which is obvious considering which EU country maliciously destroyed their economies after spending the last ten years growing rich off of them. Speaking of which, I'll bet Spain beats Germany if they meet. Emotion has to count for something; also, German minds fall to pieces when tormented by subconscious guilt. Any takers?
at 10:07 AM
Tonight's dumbass BI headline will read:
US MARKETS PLUNGE ON
(choose one: be warned, links go to idiots)
1. VIRGINIA GOP PRIMARY SHOCKER
2. IRAQI UNREST
3. YUAN WEAKENING
4. EUROPEAN CAB DRIVER PROTEST
5. US COMMERCIAL LOAN PLUNGE
6. FOMC THREAT
7. FEAR OF UPCOMING DEBT CEILING FIGHT
8. EU APPLE TAX PROBE
9. UK UNEMPLOYMENT DROP
10. ANTICIPATION OF WORLD CUP START
Tonight's headline will not read:
US MARKETS PLUNGE BECAUSE THEY WERE OVERBOUGHT YOU DUMBASS
Let's zoom back out to a normal view of GDXJ:
Look at the volume at May 27/28, and the volume yesterday.
On May 27/28, gold got smacked down in OpEx. What would you do? You'd short junior miners, right? Thus the large red volume bars.
Then yesterday, when the juniors fail to fall along with what certainly is still a pretty horrible gold chart, you'd have to cover, no? Thus high volume yesterday.
I wonder if the shorting volume from May 27/28 has been fully covered yet, or if we can get another day or two of pop. We'll see. Who knows, maybe gold even continues to dig itself out of the OpEx hole.
Then I wonder if gold (and then the miners) starts to suck again in anticipation of the Jun 18 Fed meeting. Or something. Cos it's always something.
Here are some megazoomed candle charts. First GDX:
May 27 and 28 were the dump, but that happened because of an OpEx smackdown in the gold price.
Since the 28th, there have been nine days building an ostensible "bear flag". The downward trend in volume was reversed yesterday, printing a solid white candle that broke through EMA(16) and the Bollinger mean. That looks good.
But in addition, for every red candle in those nine days, there is a white candle that's larger. So buying has swamped out selling.
So I dunno if it's a bear flag. GDX might go on a run for a while.
The same applies, except GDXJ broke through its EMA(16) and Bollinger mean on Friday, and since then has flown up and through its SMA(50) (which it lost back in March) on volume equaling the second day of selling back on the 28th.
So darn it, GDXJ sure looks good, and GDX looks good. Or at least they look less horrid than an honest, reality-based goldbug would expect them to look.
Here's some stuff to get you rolling:
Bloomberg View - the $VIX is not a great way to measure "complacency". He lays it out in a hilarious manner. Here's a taste:
A basic story that is told over and over again about financial markets is:The important thing to note is that just because something is supposed to happen doesn't mean it's going to happen instantaneously - anyone who thinks everything in the market has to happen instantly has no fucking clue how feedback systems operate and how much inertia there is in them. And if you don't understand feedback systems then you don't understand markets, in which case you shouldn't be allowed to handle other people's money or offer investment advice.
This is I think roughly the way to read the notion, which my Bloomberg View colleague Mohamed El-Erian examined today, that low readings on the VIX -- an index of implied volatility in short-dated S&P 500 index options -- mean that the market is "complacent." So:
- Things mean-revert.
- A thing is away from its mean.
- Therefore that thing will mean-revert.
- Soon and horribly.
- Equity volatility is basically a mean-reverting thing.
- The volatility index is below its long-run average.
- Therefore volatility will go higher.
- Soon and horribly.
- Run, you fools!
- Why are you being so complacent?
As far as the rest of the article, he simply and elegantly explains why $VIX has nothing to do with "complacency": it is no more than an index of the amount of insurance bought against perceived volatility over the approaching month. So if the $VIX is low right now, it's simply because the market perceives that there will be very little volatility over the next month.
FT beyond brics - big risks still stalk EM markets. Wherein they summarize the basic EM bear market thesis:
“Tighter global financial conditions over the next five years as monetary policy is normalized in high income economies is inevitable…And it will imply weaker financial flows and rising costs of capital for developing countries.”EMs are capital-hungry: they can't grow without capital. So they have to generate capital inflows: either from investment, or from exports. China does a good job of maintaining inflows from exports - the way South Korea did when it was an advanced EM - and thus China might be a "different kind of EM". Other EMs rely heavily on foreign capital inflows - e.g. to buy local debt and fund growth projects, or to fund business expansion - and thus an increase in interest demanded by DM capital will reduce potential growth in that EM.
“If interest rates rise too rapidly or there are sharp pullbacks in capital flows, economies with large external financing needs or rapid expansions in domestic credit in recent years could come under considerable stress.”And that is the general thesis against EMs. Strangely enough, the report suggests it's LatAm that is most vulnerable: I'd think they're fairly safe unless we see a collapse in commodity prices, since they're all great raw material exporters. But what do I know? And thus this particular case illustrates how you break the rule of thumb - EMs will be more or less affected depending on their need for external capital.
And then you have to ask if this time might be different due to my Piketty/Summers thesis? I mean, if Capital is running out of people to lend its money to, are we going to see a new long-term low-interest regime?
Mineweb - China announces world's second-largest gold resource. And Williams cribs a point I've made on my blog:
With its centrally planned economy and its gold mining companies also effectively all state controlled, profitability may well not pose the same kind of issues it would for shareholder-owned companies as in much of the rest of the world. One would thus expect Chinese mining companies to mine gold according to government, rather than shareholder, needs[.]That is what happens in EM secular bear markets. Production of a commodity is increased beyond profitability, for political reasons (e.g., in some cases, to earn USD from exports). Thus secular EM bear markets are able to drive secular commodity bear markets.
And the funny thing is, the exploration side of the gold industry has already been failed by capitalism - it's just not possible for Capital to earn any return on exploration investment, with the gold price where it is and the lack of profitable gold deposits to find. And so we may even see free-market exploration (i.e. Vancouver) disappear in favour of state-run (i.e. Chinese) exploration.
Tuesday, June 10, 2014
Oh and speaking of which:
Yup, the #1 search result on Google for "2015 Casey cruise" is slash fanfic about Rick Rule.
I'm sure it will be good for business. For instance, there are a large number of wealthy men in San Francisco who would lerve to go on a one-week cruise, and dammit all if they ain't the most freedom-loving libertarian people you'll ever meet! But they've never considered the Casey Cruise as a party destination until now!
I mean heck, just look at this pic from the 2013 San Francisco Ayn Rand Fanclub parade:
Now those are the type of men who you want to be on a Caribbean cruise with, mixing drinks and debating Ludwig von Mises! Every man-jack one of these fellows knows how to make a mean golden mojito, and dammit if half of them aren't also wicked DJs who can (to quote Lady Gaga) make you leave your head and your heart on the dance floor!
The 2015 Casey Cruise: book now!
1. Yes she's married.
2. The Casey Cruise is going to be one huge sausagefest.
3. Yes indeed.
4. Well she doesn't love you.
5. I guess "sous vetement" means "without clothes"? Hey froggy, the internet speaks English. You'll get more pr0n if you search in English, instead of in your silly frog words.
6. The screwing will end for another season tomorrow night, apparently.
Bloomberg Businessweek - Michael Shaoul says inflation's coming to the US. And the big loser will be US retail.
If only there was some sort of... I dunno, a metal or something which you could buy to protect against increased US inflation.
There's also an interesting thing from the Bloomberg hosts about supply and demand in bonds. Which I guess would mean bond yields will stay low, despite what Shaoul says, whereupon you'd have inflation outstripping bond yields.
OK, like I said earlier, I think the S&P might go down for a bit, since its RSI is over 70.
Which is the lamest reason in the world.
So there's got to be some other reason for people to decide to start selling off the US market, and I'd like to be able to spot the bear narrative in its infancy.
So I went and poked through the RSSes on my mobile, and there was very little bearishness to find anywhere. So let's just look through a few newsbits:
WSJ Economics - NFIB index hits highest since 2007. It's not as amazing as you'd think, since Calculated Risk has a chart that shows SBO still has a long way to go before it's recovered to pre-crash levels (and maybe that's why we're not seeing Rosie's capex push yet). Here, let me show it to you:
in fact, it looks like pre-2007 the SBO was only this low about 2%-5% of the time. Pretty stunning.
Dragonfly Capital - what does sentiment tell you? Here, listen to a sensible person explain sentiment in a way that TAs can't:
One thing everyone can agree on is that bullish sentiment measures are high. It is the interpretation of that data that draws many opinions. But shouldn’t sentiment be high as markets are making all time highs? The best take away from this piece of data on high bullish sentiment is that it aligns with bullish price action.Sentiment is supposed to be high when the market is going up. Sentiment is supposed to be low when the market is going down. Stuff that in your pipe and smoke it, mister highschool-educated contrarian blogger.
FT beyond brics - India capital raising becomes bullish. Modi eliminating the "let's fuck Vodafone" retroactive taxation law is one of those things that can have a positive multiplier effect: it was the most boneheaded move Congress made, because it told foreign capital that even thinking about investing in India would destroy your company, not just your foreign subsidiary. So him getting rid of this actually is a very good thing.
Reeking Alpha - gold manipulation: what should investors do now? This was a Ritholtz pick of the day, for some stupid reason. But it's interesting, this little bit in the middle of the article:
This is the dilemma faced by all manipulators. Manipulation is a double-edged sword. For example, if you sell large amounts of gold today in order to manipulate prices downward, you will now be a source of demand tomorrow that will tend to push prices up. Because prices - especially in large and liquid markets such as gold -- are ultimately determined by supply and demand, manipulators have little or no net effect on prices beyond the very short term. This is because manipulation provides no net supply or demand to the market. The positions taken to manipulate the market must be unwound, and so by the law of supply and demand the net impact on prices will tend to be a wash.Uh, wait. You just described the options market. You're saying that trading of paper gold requires that positions be unwound, therefore there is no net impact on demand.
So you're saying that the longer-term gold price is determined entirely by supply from mines, and demand from Asia.
Bought gold yet, Barry?
IKN - I love Rio Alto so much that I've now made it all sticky and gross. Wherein Otto asks you to join him for some sloppy seconds from a subscriber-only bulletin:
By way of a very quick resume, on Monday i spent two hours with the RIO.to CEO and COO in Lima. Then unbeknown to them and anyone else, got on a plane and a couple of buses for an uninvited site trip to Cajabamba, in the Cajamarca region of Peru, to check out the Sulliden project for myself as well as discuss the project with politicos in town. I'm still in Cajabamba this morning and one meeting left in town this morning before heading out, but it's very unlikely indeed to change today's call.
I've met the people i wanted to meet in Cajabmaba and i've seen 98% of the things to see at Shahuindo without being invited on site (a near-arrest stopped me from seeing the last 2%, i'll tell you about that Sunday, all good fun though). You'll get a full report and photoshow in Sunday's edition of the Weekly, but the bottom line is that Shahuindo is in a much better political and community risk position than i'd previously assumed. I was wrong about this project and it's taken the takeover situation for me to shake down my assumptions, but now that i have and i've seen and heard the situation here, this project is one that's going to happen.
So when I said earlier today that I was lightening up on my DM positions for a (erp) junior miner, this is the junior miner I was referring to, and it's all because of IKN. Far as I'm concerned, there was a completely logical argument to be made for dumping Rio from $5 down to $2 - whether or not you agreed with it, it was still perfectly logical.
But the argument is negated if RIO buys SUE, and so $2 RIO is very obviously a bullshit price again, and I'm betting the big houses are all cluing in to this right now, and so I'm now a happy buyer.
Here's the S&P chart as of yesterday close:
RSI is over 70, MACD is as high as it ever was, and there's a heck of a lot of white candles in a row over the past 3 weeks.
So maybe the S&P 500 is done its moving for the next few months?
Then again, R2K provides the counterfactual:
Does it have to make a new high before this bull move is done?
Well, people supposedly rotated out of R2K because they want to buy US economic growth instead of specific growth stories. So maybe no.
Then again, maybe people oversold the R2K and Q on the last rotation, and it needs to pop back more. So maybe yes.
Then again then again, a local top today, followed by a few months of chop, would mean people start freaking out again about the US market because "OMG the R2K didn't confirm the S&P breakout, therefore DOOOOOM!!!1!eleven!!" They'd even see the potential for an H&S in the R2K, and that would really freak them out - despite the utter lack of volume that'll show on the right shoulder, which will mean it's not a H&S. And that would about characterize the narrative for every single level month in the market, no?
Then again then again then again, why would the S&P stop before 2000? Law of round numbers says that shouldn't happen. It broke 1900, therefore 2000 is baked in.
Then again then again then again then again, if it did stop before 2000, maybe the press would discover the law of round numbers and start calling that another reason to fear the imminent collapse.
My own theory right now is the gold miners (one in particular) should do pretty well in the next few weeks, and a one-month 10%-20% profit is enough to drag me away from the S&P.
Because RSIs are too high, and thus I think this move is a bit overextended.
More importantly, I think every other clown on the market also follows RSIs.
Monday, June 9, 2014
Here's another of them ratio charts:
If gold is about to collapse, why the heck is GDXJ being strong all of a sudden? from <-2SD upon the OpEx smackdown, GDXJ:GLD has moved back to >+2SD.
Does that make any sense if, say, gold is going to $1000?
Here's SPX versus R2K:
Does R2K always outperform SPY in times of economic strength?
Well, people quit worrying and learned to love the US economy in late 2012; after that, the chart shows that R2K outperformed SPY.
Until, of course, the great internal rotation of 2014 occurred this spring. You remember, that was when everyone was freaking out and calling a top in the S&P - or even worse, calling it a bubble that was about to pop as leadership narrowed.
Since May, though, R2K has moved right back to outperforming SPX.
This chart seems to show that, if 2013 was a justified trend, a correction back to trend by IWM will need to outperform SPX by a good 10% just to get back to where it was.
Would you buy that?
I dunno. Does this look like a bear flag to you?
Sure looks like it, eh? We even have diminishing volume as it tries to rise.
But then I go and look at GDXJ and I see something different:
Looks like GDXJ has completely battled back from its drop. It's back over its EMA(16), it's back over its Bollinger mean, the violated support at ~$35 has been recovered, and there were two good days of buying volume to end last week.
I've been suspecting that the GLD break of support was a bullshit move, entirely caused by an OpEx smackdown. Certainly we haven't seen any follow-through at all, and if you've been following gold for the past few years you darn well know by now that violated support usually sees follow-through.
So maybe this breakdown in gold was a headfake?
Doesn't mean it'll go back up, of course. But it was instructive to watch for follow-through on the OpEx smackdown.
Here's some stuff to get you rolling:
New Deal Demoncrat - smoking hot start to June. I like the cattiness of the new NDD:
In the last few days, it has been ruefully amusing to watch Doomers come out the woodwork to suddenly discover a story in the first quarter GDP, when we were watching the actual story happen in this data in real time three and four months ago.Which is true. He was worrying about Q1 back when Q1 was happening. Because he has the weekly indicators, which give you the state of the economy in real time. Which you should be watching, instead of backward-looking data.
Reformed Borker (Bork Bork Bork!) - cake bubbles and art bubbles. He's clued in to what I just posted:
Art is the ultimate anti-commodity. There’s only one of everything and if you want it, the price can be based on nothing but your own desire to have it versus the next most covetous maniac – there are no replacement values to be factored in.So... bullish gold then, Josh?
FT Alphaville - the recovery of global goods demand. No shit? It's up because the US and Japan are booming, you say? I was there first.
The Krugginator - Europe's age of diminished expectations. Apparently, people expect Europe to remain depressed for a long time. I entirely blame the Germans, of course. So you can go contra the herd if you want; I however have spent a few years watching Europe being led stupidly by the Teutonic brigade, so I'm not as willing to go bullish EZ.
Bloomberg - Modi targets $2T in assets held overseas. Ha! Good luck with that, buddy!
FT beyond brics - illuminating China's shadows. Some ideas for you, in case you're interested.
So gold is a barbarous relic, we know that. It has nothing to do with money anymore. We dig it out of the ground and melt it down, just so we can bury it again.
It has no intrinsic value, except for the following:
1. It's a great conductor that doesn't corrode: this makes it better than copper or aluminium.
2. For some reason it's also good for dental fillings.
3. If you want to keep your wife happy you'd better give her some.
So if the price of gold is more than say $5 a pound (the price you'd expect for its preferability to copper, otherwise we'd wire the planet with it), the price difference is all up to expecting people to pay more for it than you did.
What kind of clown would invest in something with the hope that you can foist it off on someone else for a higher price in the future? Especially if you have to pay a yearly storage cost!
This got me thinking about gold analogues, and specifically art.
Why the heck would someone pay £8.9 million for the Rothschild Egg? It has very little intrinsic value. I mean, sure, it's skilfully made and a historical piece, but that value is entirely subjective.
And what about paying $259 million for a painting of two dudes playing cards? Seriously? Paul Cézanne couldn't have made this painting more banale if he'd instead done a bunch of dogs on velour.
Canadians should be able to sympathize with this argument: after all, just a couple decades ago our National Gallery paid $1.8 million for an eighteen-foot racing stripe. How the heck is a racing stripe worth that much?
Next time some clever dick says gold has no intrinsic value, ask him how he's decorated his house. If he has anything more expensive than a Kylie Minogue poster, you might want to point out the silliness of investing in art.