Correction for Nasdaq- More Indices to Follow?

Well, I was right to doubt him. The market didn’t like his change in tone Thursday (Mar. 5).

You see, when bond yields are rising as fast as they have, and Powell is maintaining that Fed policy won’t change while admitting that inflation may ” return temporarily ,” how are investors supposed to react? On the surface, this may not sound like a big deal. But there are six things to consider here:

  1. It’s a significant backtrack from saying that inflation isn’t a concern. By admitting that inflation “could” return temporarily, that’s giving credence to the fact that it’s inevitable.
  2. The Fed can’t expect to let the GDP scorch without hiking rates. If inflation “temporarily returns,” who is to say that rates won’t hike sooner than anyone imagines?
  3. Fool me once, shame on me, fool me twice…you know the rest. If Powell changed his tune now about inflation, what will he do a few weeks or months from now when it really becomes an issue?
  4. Does Jay Powell know what he’s doing, and does he have control of the bond market?
  5. A reopening economy is a blessing and a curse. It’s a blessing for value plays and cyclicals that were crushed during COVID and a curse for high-flying tech names who benefitted from “stay-at-home” and low-interest rates.
  6. The Senate will be debating President Biden’s $1.9 trillion stimulus plan. If this passes, as I assume it will, could it actually be worse for the economy than better? Could markets sell-off rather than surge? Once this passes, inflation is all but a formality.

Look, it’s not the fact that bond yields are rising that are freaking out investors. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. But it’s the speed at which they’ve risen that are terrifying people.

According to Bloomberg , the price of gas and food already appear to be getting a head start on inflation. For January, Consumer Price Index data also found that the cost of food eaten at home rose 3.7 percent from a year ago — more than double the 1.4 percent year-over-year increase in all goods included in the CPI.

The month of January. Can you imagine what this was like for February? Can you imagine what it will be like for March?

I’m not trying to sound the alarm- but be very aware. These are just the early warning signs.

So, where do we go from here? Time will tell. While I still do not foresee a crash like we saw last March and feel that the wheels remain in motion for a healthy 2021, that correction that I’ve been calling for has already started for the Nasdaq. Other indices could potentially follow.

Finally.

Corrections are healthy and normal market behavior, and we have been long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).

Most importantly, this correction could be an excellent buying opportunity.

It can be a very tricky time for investors right now. But never, ever, trade with emotion. Buy low, sell high, and be a little bit contrarian. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself. Be careful, but be a little bold right now too.

There’s always a bull market somewhere, and valuations, while still somewhat frothy, are at much more buyable levels now.

My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

With that said, to sum it up:

There is optimism but signs of concern. A further downturn by the end of the month is very possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen.

Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

Nasdaq– From Overbought to Oversold in 3 Weeks?

Figure 1- Nasdaq Composite Index $COMP

The Nasdaq is finally in correction territory! I have been waiting for this. It’s been long overdue and valuations, while still frothy, are much more buyable. While more pain could be on the horizon until we get some clarity on this bond market and inflation, its drop below 13000 is certainly buyable.

The Nasdaq has also given up its gains for 2021, its RSI is nearly oversold at about 35, and we’re almost at a 2-month low.

It can’t hurt to start nibbling now. There could be some more short-term pain, but if you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.

Plus, it’s safe to say that Cathie Wood, the guru of the ARK ETFs, is the best growth stock picker of our generation. Bloomberg News ’ editor-in-chief emeritus Matthew A. Winkler seems to think so too. Her ETFs, which have continuously outperformed, focus on the most innovative and disruptive tech companies out there. Not to put a lot of stock in one person. But it’s safe to say she knows a thing or two about tech stocks and when to initiate positions- and she did a lot of buying the last few weeks.

I think the key here is to “selectively buy.” I remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

I also think it’s an outstanding buying opportunity for big tech companies with proven businesses and solid balance sheets. Take Apple (AAPL), for example. It’s about 30% off its all-time highs. That is what I call discount shopping.

What’s also crazy is the Nasdaq went from overbought 3 weeks ago to nearly oversold this week. The Nasdaq has been trading in a clear RSI-based pattern, and we’re at a very buyable level right now.

I like the levels we’re at, and despite the possibility of more losses in the short-run, it’s a good time to start to BUY. But just be mindful of the RSI, and don’t buy risky assets. Find emerging tech sectors or high-quality companies trading at a discount.

For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be 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, Matthew Levy, 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. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s 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. Matthew Levy, 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.

 

Gold Approaches $1,700 on Rising Economic Confidence

The chart presenting gold prices in 2021 doesn’t look too encouraging. The yellow metal continued its bearish trend at the turn of February and March. So, as one can see, the price of gold has declined from $1,943 on January 4 to $1,711 on Wednesday (Mar. 3) This means a drop of 232 bucks, or 12 percent since the beginning of the year.

What is happening in the gold market? I would like to blame the jittering bond market and increasing bond yields , but the uncomfortable truth is that the yellow metal has slid in the past few days despite the downward correction in the bond yields. If you don’t believe, take a look at the chart below. This is an important bearish signal, given how closely gold is usually linked to the real interest rates .

So, it seems that there are more factors at work than just the bond yields. One of them is the recent modest strengthening of the greenback , probably amid rising U.S. interest rates and ECB officials’ remarks about possible expansion of the ECB’s accommodative stance if the selloff in the bond market continues.

Another piece of bearish news for the gold market is that President Joe Biden struck a last-minute stimulus deal with Democratic Senators that narrows the income eligibility for the next round of $1,400 stimulus checks. It means that the upcoming fiscal stimulus will be lower than previously expected, negatively affecting inflation expectations and, thus, the demand for gold as an inflation hedge .

Lastly, I have to mention the high level of confidence in the economy. Indeed, the recent rise in the bond yields may just be a sign of more optimism about the economic recovery from the pandemic recession . Hence, despite all the economic problems the U.S. will have to face – mainly the huge indebtedness or actually the debt-trap – investors have decided to not pay too much attention to the elephants in the room. As the chart below shows, the credit spread (ICE BofA US High Yield Index Option-Adjusted Spread), which is a useful measure of economic confidence, has returned to the pre-pandemic level, indicating a strong belief in the state of the economy. This is, of course, bad for safe-haven assets such as gold.

Implications for Gold

What does this all mean for gold prices? Well, from the long-term perspective, the recent slide to almost $1,700 could just be noise in the marketplace. But gold’s disappointing performance is really disturbing given the seemingly perfect environment for the precious metals . After all, we live in a world of negative interest rates , a weak U.S. dollar, rising fiscal deficits and public debt , soaring money supply and unprecedented dovish monetary and fiscal policies . So, the bearish trend may be more lasting, as market sentiment is still negative. Investors usually turn to gold, a great portfolio diversifier and a safe haven , when other investment are falling. But the worst is already behind us, the economy has already bottomed out, so confidence in the economy is now high, and equities are rising.

Having said that, the recent jump in the bond yields also means rising inflation expectations . Indeed, as the chart below shows, they have already surpassed the levels seen before the outbreak of the pandemic .

Actually, the 5-year breakeven inflation rate has reached 2.45 percent, the highest level since the midst of the Great Recession . So, in some part, investors are selling bonds, as they are preparing for an reflation environment marked by higher inflation . At some point, if the fear of inflation strengthens, then economic confidence will waver, and investors could again turn toward gold.

If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Arkadiusz Sieron, PhD
Sunshine Profits: Effective Investment through Diligence & Care

 

Gold Continues Declines on Bond Yield Jitters

Not good. Gold bulls can be truly upset. The yellow metal continued its bearish trend last week. As the chart below shows, the price of gold has declined from $1,807 on Monday (Feb. 22) to $1,743 on Friday (Feb. 26).

What happened? Well, last week was full of positive economic news. In particular, personal income surged by 10 percent in January, compared to only 0.6-percent rise in the previous month. Meanwhile, consumer spending increased 2.4 percent, following a 0.4-percent decline in December. This means that, on an absolute basis, personal consumption expenditures have almost returned to the pre- pandemic level, as the chart below shows.

Additionally, durable goods orders jumped by 3.4 percent in January versus a 1.2-percent increase one month earlier. Moreover, initial jobless claims declined from 841,000 to 730,000 in the week ending February 20, as the chart below shows. It means that the economic situation is improving, partially thanks to the December fiscal stimulus.

And, on Saturday (Feb. 27), the House of Representatives passed Biden’s $1.9 trillion stimulus package. Although the bill has yet to be approved by the Senate, the move by the House brings us one step closer to its implementation. Although the additional fiscal stimulus may overheat the economy and turn out to be positive for gold prices in the long-term, the strengthened prospects of higher government expenditures can revive the optimism in the financial markets, negatively affecting the safe-haven assets such as gold .

Finally, on Saturday, the FDA authorized Johnson & Johnson’s vaccine against COVID-19. This decision expands the availability of vaccines, which brings us closer to the end of the epidemic in the U.S. and offers hope for a faster economic recovery. The new vaccine is highly effective (it provides 85-percent protection against severe COVID-19 28 days after vaccination) and most importantly, requires only one dose, which facilitates efficient distribution. So, the approval of another vaccine is rather bad news for gold and could add to the metal’s problems in the near future.

However, the most important development from the last week was the jump in the bond yields . As the chart below shows, after a short stabilization in the first half of the week, the yields on the 10-year Treasuries indexed by inflation rose from -0.79 to -0.60 percent on Thursday (Feb. 25). This surge in the real interest rates is negative for the price of gold.

Implications for Gold

What does this all mean for the price of gold? Well, the increase in the bond yields is clearly bad for the yellow metal. Although they have partially risen to strengthened inflation expectations, the real interest rates have also soared. It means that investors expect wider fiscal deficits and expanding vaccination to accelerate inflation only partially, but in a large part, it will speed up real economic growth. This is a huge problem for gold, as real interest rates are a key driver of gold prices.

An additional issue is that the expectations of higher economic growth and inflation create accompanying expectations for the Fed to tighten its monetary policy and hike the federal funds rate , which exerts downward pressure on gold prices.

This is what we were afraid of at the beginning of the year. We noted that the real interest rates were so low that the next move could be up. Importantly, there is further room for upward trajectory, as the real interest rates are still importantly below the pre-pandemic level.

However, we wouldn’t bet on the return to the levels seen last year. After all, interest rates didn’t return to the pre-crisis level after the Great Recession , so it’s unlikely that they will do it now. Additionally, investors should remember that the U.S. government is now so heavily indebted that if Treasury yields continue to increase, the Fed would have to intervene. A failure to do so would mean that the interest expenses would grow too much, creating serious problems for the Treasury. So, the current bearish trend in gold may not last forever – although it may still take some time.

If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Arkadiusz Sieron, PhD
Sunshine Profits: Effective Investment through Diligence & Care

Treasury Yields Rally May Trigger A Crazy Ivan Event (Again)

Since shortly after the US November elections, my research team and I have been clear about our research and our belief that the bullish rally in the markets would continue to drive the strongest sectors higher and higher.  In December 2020, we shared an article suggesting our proprietary Fibonacci Price Amplitude Arcs and GANN theory indicated a major price peak could set up in early April 2021.  On February 3, 2021, we also published an early warning that Treasury Yields were set up to prompt a big topping pattern sometime over the next 6+ months .  We followed that up with a February 21, 2021 article suggesting future Gold and Silver price trends may be tied to the moves in Treasury Yields and the resulting stock market trends.

Now that the Treasury Yields have completed what we suggested would be required to start a “revaluation event” in the stock market, we believe that a “Crazy Ivan” event may soon setup in the global markets.  Many months back (August 28, 2019), we published an article about precious metals were about to pull a Crazy Ivan price event. This prediction came true in 2020 and 2021.  Now, we are suggesting the global markets may pull a new type of Crazy Ivan event – a price revaluation event prompted by the rise in Treasury Yields.

The Yields Setup

In our February 3, 2021, research article about the Treasury Yields, we suggested that a series of setup processes take place that prompt a broad market correction related to Treasury Yields.  First, Yields must fall from levels above the Breakdown Threshold to levels below the Setup Threshold to complete the first stage of the setup.  This first stage sets up the potential for moderate sideways price trends nearing a peak, or congestion.  The second stage of this setup is that Yields must fall to levels below ZERO.  This move creates the potential for one of two outcomes when Yields begin to rally.

  • If Yields rally back above the Setup Threshold and/or the Breakdown Threshold, but then stall and reverse back below the Breakdown Threshold, then the markets will likely stall/congest or enter a sideways/rolling top type of trend for a period of 2 to 6+ months.
  • If Yields rally back above both the Setup Threshold and the Breakdown Threshold and continue to rally higher, then the markets begin to start a sideways/correction event which we are calling a Crazy Ivan event.

We have highlighted all the areas in the charts below where the Yields have fallen to levels below ZERO on this chart and you can clearly see how the SPX reacted to these upside Yields recovery events.  Every time (in RED) where the Yields rallied above the Setup and Breakdown Threshold levels, a broad market downtrend setup within 6 to 12+ months of this event.  We believe the markets are about to do the same type of thing and we are calling it a Crazy Ivan event because we believe the current market setup is vastly different than the previous setups.

If the markets start to roll over and volatility continues to stay higher or rise, we can benefit from it with our Options Trading Signals which we use non-direction trades to sell premiums. This allows options traders to profit from volatility and not worry about which way the market moves.

The current Crazy Ivan setup

The following current Yields chart shows a more detailed example of what is currently taking place related to the Crazy Ivan setup.  Yields are back above the 1.35 level on this chart and have quickly rallied above the Setup and Breakdown Threshold levels.  If Yields continue to rally from this level, we believe the markets will quickly shift into a sideways/rolling top formation which will eventually prompt a new Crazy Ivan price event (a big revaluation event).  If yields stall near these current levels and move back below the Breakdown Threshold, then we may still see a bit of sideways trading for a while, but usually the markets will begin to resume an upward price trend if Yields stay below the Breakdown Threshold.

The outcome hinges on what Yields do in the next 4 to 12+ months and we believe traders and investors need to prepare for big shifting trends in major sectors and indexes going forward.  The setup process is already complete at this point.  We are not waiting for anything to further complete this potential for the Crazy Ivan event.  We are just watching Yields to see if they continue higher or stall and move back below the Breakdown Threshold.  At this point, the Crazy Ivan price revaluation event is almost a certainty – it is just a matter of time.

What we expect to see is not the same type of market trend that we have experienced over the past 8+ years – this is a completely different set of market dynamics. Don’t miss the opportunities in the broad market sectors in 2021, which will be an incredible year for traders of the BAN strategy.  You can sign up now for my FREE webinar that teaches you how to find, enter, and profit from only those sectors that have the most strength and momentum. Staying ahead of sector trends is going to be key to success in volatile markets.

In the second part of this article we will publish later this week, we will review and share more data and details related to the rising Yields and the pressures that will likely be placed on the global markets.  You don’t want to miss the conclusions of our research.

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen
Founder & Chief Market Strategist
www.TheTechnicalTraders.com

 

US Stock Market Daily Recap: Worst for Stocks Over?

The way that bond yields have popped has weighed heavily on growth stocks. Outside of seeing a minor comeback on Friday (Feb. 26), the Nasdaq dropped almost 7% between February 12 and Friday’s (Feb. 26) close.

Other indices didn’t fare much better either.

The spike bond yields, however, in my view, are nothing more than a catalyst for stocks to cool off and an indicator of some medium to long-term concerns. But calling them a structural threat is a bit of an overstatement.

Rising bond yields are a blessing and a curse. On the one hand, bond investors see the economy reopening and heating up. On the other hand, with the Fed expected to let the GDP heat up without hiking rates, inflation may return.

I don’t care what Chairman Powell says about inflation targets this and that. He can’t expect to keep rates this low, buy bonds, permit money to be printed without a care, and have the economy not overheat.

He may not have a choice but to hike rates sooner than expected. If not this year, then in 2022. I no longer buy all that talk about keeping rates at 0% through 2023. It just can’t happen if bond yields keep popping like this.

So was the second half of February the start of the correction that I’ve been calling for? Or is this “downturn” already over?

Time will tell. While I still do not foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of this month could happen.

Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in almost a year.

A correction could also be an excellent buying opportunity for what could be a great second half of the year.

Pay attention to several things this week. The PMI composite, jobs data, and consumer credit levels will be announced this week.

We have more earnings on tap this week too. Monday (March 1), we have Nio (NIO) and Zoom (ZM), Tuesday (March 2) we have Target (TGT) and Sea Limited (SE), Wednesday (March 3), we have Okta (OKTA) and Snowflake (SNOW), and Thursday (March 3) we have Broadcom (AVGO).

My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

With that said, to sum it up:

The downturn we experienced to close out February could be the start of a short-term correction- or it may be a brief slowdown. A further downturn by the end of the month is very possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen.

Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

 Nasdaq- a Buyable Slowdown?

Figure 1- Nasdaq Composite Index $COMP

The Nasdaq’s downturn was so overdue. Even though more pain could be on the horizon, I like the Nasdaq at this level for some buying opportunities.

If more losses come and the tech-heavy index dips below support at 13000, then it could be an even better buying opportunity. It can’t hurt to start nibbling now, though. If you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.

Plus, if Cathie Wood, the guru of the ARK ETFs that have continuously outperformed, did a lot of buying the last two weeks, it’s safe to say she knows a thing or two about tech stocks and when to initiate positions. Bloomberg News ’ editor-in-chief emeritus Matthew A. Winkler wouldn’t have just named anyone the best stock picker of 2020.

Before February 12, I would always discuss the Nasdaq’s RSI and recommend watching out if it exceeds 70.

Now? As tracked by the Invesco QQQ ETF , the Nasdaq has plummeted almost 7% since February 12 and is closer to oversold than overbought. !

While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony last week (even if I don’t totally buy into it). Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?

Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after its recent slowdown, I feel more confident in the Nasdaq as a SHORT-TERM BUY.

The RSI is king for the Nasdaq . Its RSI is now around 40.

I follow the RSI for the Nasdaq religiously because the index is merely trading in a precise pattern.

In the past few months, when the Nasdaq has exceeded an overbought 70 RSI, it has consistently sold off.

  • December 9- exceeded an RSI of 70 and briefly pulled back.
  • January 4- exceeded a 70 RSI just before the new year and declined 1.47%.
  • January 11- declined by 1.45% after exceeding a 70 RSI.
  • Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.

I like that the Nasdaq is almost at its support level of 13000, and especially that it’s below its 50-day moving average now.

I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.

For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be 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, Matthew Levy, 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. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s 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. Matthew Levy, 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.

 

US Stock Markets Daily Recap: Finally the Stock Market Tanks

Surging bond yields continues to weigh on tech stocks. When the 10-year yield pops by 20 basis points to reach a 1-year high, that will happen.

Tuesday (Feb. 23) saw the Dow down 360 points at one point, and the Nasdaq down 3% before a sharp reversal that carried to Wednesday (Feb. 24).

Thursday (Feb. 25) was a different story and long overdue.

Overall, the market saw a broad sell-off with the Dow down over 550 points, the S&P falling 2.45%, the Nasdaq tanking over 3.50%, and seeing its worst day since October, and the small-cap Russell 2000 shedding 3.70%.

Rising bond yields are a blessing and a curse. On the one hand, bond investors see the economy reopening and heating up. On the other hand, with the Fed expected to let the GDP heat up without hiking rates, say welcome back to inflation.

I don’t care what Chairman Powell says about inflation targets this and that. He can’t expect to keep rates this low, buy bonds, permit money to be printed without a care, and have the economy not overheat.

He may not have a choice but to hike rates sooner than expected. If not this year, then in 2022. I no longer buy all that talk about keeping rates at 0% through 2023. It just can’t happen if bond yields keep popping like this.

This slowdown, namely with the Nasdaq, poses some desirable buying opportunities. The QQQ ETF, which tracks the Nasdaq is down a reasonably attractive 7% since February 12. But there still could be some short-term pressure on stocks.

That correction I’ve been calling for weeks? It may have potentially started, especially for tech. While I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of March could happen.

I mean, we’re already about 3% away from an actual correction in the Nasdaq…

Bank of America also echoed this statement and said, “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”

Look. This has been a rough week. But don’t panic, and look for opportunities. We have a very market-friendly monetary policy, and corrections are more common than most realize.

Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.

A correction could also be an excellent buying opportunity for what could be a great second half of the year.

My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

With that said, to sum it up:

While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.

Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

 Nasdaq- To Buy or Not to Buy?

Figure 1- Nasdaq Composite Index $COMP

This downturn is so overdue. More pain could be on the horizon, but this road towards a correction was needed for the Nasdaq.

Before February 12, I would always discuss the Nasdaq’s RSI and recommend watching out if it exceeds 70.

Now? As tracked by the Invesco QQQ ETF , the Nasdaq has plummeted by nearly 7% since February 12 and is trending towards oversold levels! I hate to say I’m excited about this recent decline, but I am.

While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony the other day (even if I don’t totally buy into it). Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?

Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after its recent slowdown, I feel more confident in the Nasdaq as a SHORT-TERM BUY.

The RSI is king for the Nasdaq . Its RSI is now under 40, which makes it borderline oversold.

I follow the RSI for the Nasdaq religiously because the index is simply trading in a precise pattern.

In the past few months, when the Nasdaq has exceeded an overbought 70 RSI, it has consistently sold off.

  • December 9- exceeded an RSI of 70 and briefly pulled back.
  • January 4- exceeded a 70 RSI just before the new year and declined 1.47%.
  • January 11- declined by 1.45% after exceeding a 70 RSI.
  • Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.

I like that the Nasdaq is almost the 13100-level, and especially that it’s below its 50-day moving average now.

I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.

For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be 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, Matthew Levy, 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. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s 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. Matthew Levy, 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.

 

Gold Declines Despite Powell’s Easy Stance

On Tuesday, Powell testified before the United States Senate Committee on Banking, Housing, and Urban Affairs. He offered no big surprises, so the markets were little changed. But the price of gold ended that day with a slight loss, as the chart below shows – perhaps just because Powell didn’t surprise, and struck a dovish tone.

Anyway, what did the Fed Chair say? In his prepared remarks, Powell acknowledged the improved outlook for later this year . As I noted in the last edition of the Fundamental Gold Report about the recent FOMC minutes , a more optimistic Fed about the U.S. economy is bad news for gold.

Additionally, Powell downplayed concerns about the recent rises in the bond yields (see the chart below), calling them “a statement of confidence” for an improving U.S. economic outlook, or “a robust and ultimately complete recovery”. This is also a negative comment for the yellow metal, as it would prefer the Fed reacting more aggressively to the increasing rates, and, for instance, implementing the yield curve control . The higher the yields, the worse it is for gold, which is a non-interest bearing asset.

However, Powell also made some dovish comments . First of all, he reiterated that the Fed’s easy stance will last very long – longer than it used to be in the past . This is because the Fed implemented last year a new monetary framework, according to which the U.S. monetary policy will be informed by the assessments of shortfalls of employment from its maximum level, rather than by deviations from its maximum level. Moreover, the Fed will seek to achieve inflation that averages two percent over time. These changes imply that the Fed will not tighten monetary policy solely in response to a strong labor market, but only to an increase in inflation . However,But inflation must not merely reach two percent – it should rise moderately above two percent for some time in order to prompt the U.S. central bank to taper the quantitative easing and hike the federal funds rate .

The second reason why the interest rates will stay lower for longer is that the economy is a long way from the Fed’s employment and inflation goals, and “it is likely to take some time for substantial further progress to be achieved”. On Wednesday, Powell acknowledged that it may take more than three years to reach these goals. This means that the Fed will treat any possible increases in inflation this year as temporary and will leave interest rates unchanged.

Implications for Gold

What does Powell’s testimony imply for the gold market? Well, gold bulls may be disappointed as the Fed Chair didn’t sound too dovish . He neither announced an expansion in the quantitative easing, nor the yield curve control, nor negative interest rates , nor a “whatever it takes” approach. And it seems that the yellow metal needs such things right now in order to survive – just like fish need water.

However, the rising bond yields could become a problem at one point for the Fed. If they continue to rise, Uncle Sam will not be happy, and the Fed will have to step into the market to buy government bonds. The central bank and Treasury are good old friends and the close relationship between Powell and Yellen may only strengthen this beautiful friendship – and support gold prices.

Moreover, the increasing bond yields (despite an ultra-dovish Fed) imply that reflation trade is strong. So far, investors just expect a return of inflation to a moderate level, but given the enormous surge in the broad money supply (see the chart below) and Biden’s mammoth fiscal plan, the risk of overheating is non-negligible.

It would be really strange if such an aggressive monetary expansion wouldn’t affect the prices. As one can see, the growth in the M2 money supply is 2.5 times faster than during the Great Recession . Actually, we are already seeing inflation – but in the asset markets, not the CPI . The stock and house prices are surging. The commodity sector has also already been gaining and gold may follow suit .

If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Arkadiusz Sieron, PhD
Sunshine Profits: Effective Investment through Diligence & Care

 

 

Bonds And Stimulus Are Driving Big Sector Trends And Shifting Capital

Falling Bonds and rising yields are creating a condition in the global markets where capital is shifting away from Technology, Communication Services and Discretionary stocks have suddenly fallen out of favor, and Financials, Energy, Real Estate, and Metals/Miners are gaining strength.  The rise in yields presents an opportunity for Banks and Lenders to profit from increased yield rates. In addition, historically low interest rates have pushed the Real Estate sector, including commodities towards new highs.

We also note Miners and Metals have shown strong support recently as the US Dollar and Bonds continue to collapse.  The way the markets are shifting right now is suggesting that we may be close to a technology peak, similar to the DOT COM peak, where capital rushes away from recently high-flying technology firms into other sectors (such as Banks, Financials, Real Estate, and Energy).

The deep dive in Bonds and the US Dollar aligns with the research we conducted near the end of 2020, which suggested a market peak may set up in late February. We also suggested the markets may continue to trade in a sideways (rounded top) type of structure until late March or early April 2021.  Our tools and research help us to make these predictions nearly 4 to 5+ months before the markets attempt to make these moves.  You can read this research here:

2021 MAY BE A GOOD YEAR FOR THE CANNABIS/MARIJUANA SECTOR

PRICE AMPLITUDE ARCS/GANN SUGGEST A MAJOR PEAK IN EARLY APRIL 2021 – PART II

If our research is correct, we may have started a “capital shift” process in mid-February where declining Bonds, rising yields and the declining US Dollar push traders to re-evaluate continued profit potential in the hottest sectors over the past 6 to 12+ months.  This would mean that Technology, Healthcare, Comm Services and Discretionary sectors may suddenly find themselves on the “not so hot” list soon.

Bonds Collapsing While Yields Continue To Rise

The following TLT Weekly chart highlights the extended downward trend taking place in Treasury Bonds.  This downside pricing pressure would usually support a rising stock market and moderately weaker precious metals.  But given the way the US Dollar is also declining, we are seeing fear become more of an issue as the high-flying stock market starts to look quite a bit over valued.  Rising yields also puts Financials and banking/lending near the top of the list for future profit potential.

US Dollar Struggling To Find Support

The Invesco US Dollar ETF, (UUP) Weekly below chart shows how weak the US Dollar has been after the COVID-19 price rotation.  The continued decline in price levels after May 2020 is a very clear indication that the US Dollar is reacting to the continued stimulus efforts as well as the decreased economic expectations.

Combined, the Bonds and US Dollar decline are raising the fear-factor among global investors and causing many to rethink where future growth and profits will originate.  Many are landing on the Financial and Energy sectors right now.

Financial Sector Begins To Skyrocket Higher

The following Direxion Financial Bull 3x ETF (FAS) Weekly chart shows the incredible advance in the Financial Sector over the past 6+ months.  Almost like a sleepy rally, Financials have been rallying while traders have been focused on Technology, Healthcare and other sectors that seemed hot.  This shifting trend in sectors, and the associated shifting capital, suggests we may be nearing a tidal shift in sector trends – moving away from Technology and into Financials, Energy, Real Estate, and others.

Volatility is still 2x to 3x what we have seen 4 to 5+ years ago.  This suggests any breakdown in trends could prompt a very volatile price correction/transition.  As sectors continue to shift, we urge traders to pay attention to the risks in the markets related to this elevated volatility which seems to be present in every sector.

We believe we may be starting an extended “capital shift” process which may last well into March/April 2021 before real opportunities setup possibly in May or June.  The markets will do what they always do, react to traders, capital, and global central bank influence.  There are times when certain sectors enter a euphoric phase and there are times when the global markets revalue risk.  We may be nearing an end to a euphoric phase and starting a revaluation phase.

This means many various sectors and symbols will present some very real opportunities for profits over the next few weeks and months.  Marijuana, Cryptos, Metals, Miners, Financials & Real Estate appear to be leading opportunities related to sector trends.  If these trends continue throughout 2021, we may see a revaluation/capital shift to propel these trends higher.

For those who believe in the power of trading on relative strength, market cycles, and momentum but don’t have the time to do the research every day then my BAN Trader Pro newsletter service does all the work for you with daily market reports, research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my premium subscribers.

For a look at all of today’s economic events, check out our economic calendar.

Have a great rest of the week!

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

 

How Bond Yields Are Affecting Gold

After Monday’s (Feb. 22) supposedly “groundbreaking” rally, the situation in gold developed in tune with what I wrote yesterday . The rally stopped, and miners’ decline indicated that it was a counter-trend move.

ChartDescription automatically generated

Figure 1

Despite Monday’s (quite sharp for a daily move) upswing, the breakdown below the neck level of the broad head-and-shoulders remains intact. It wasn’t invalidated. In fact, based on Monday’s rally and yesterday’s (Feb. 23) decline, it was verified. One of the trading guidelines is to wait for the verification of the breakdown below the H&S pattern before entering a position.

What about gold stocks ratio with other stocks?

ChartDescription automatically generated

Figure 2

It’s exactly the same thing. The breakdown below the rising long-term support line remains intact. The recent upswing was just a quick comeback to the broken line that didn’t take it above it. Conversely, the HUI to S&P 500 ratio declined once again.

Consequently, bearish implications of the breakdowns remain up-to-date . Having said that, let’s consider the more fundamental side of things.

Swimming Against the Current

After trading lower for six consecutive days, gold managed to muster a three-day winning streak. However, with the waves chopping and the ripple gaining steam, every swim higher requires more energy and yield’s decelerating results.

For weeks , I’ve been warning that a declining copper/U.S. 10-Year Treasury yield ratio signaled a further downside for gold. And with the ratio declining by 2.88% last week, gold suffered a 2.51% drawdown.

Please see below:

Chart, line chartDescription automatically generated

Figure 3

Over the long-term, the ratio is a reliable predictor of the yellow metal’s future direction. And even though the weekly reading (3.04) hit its lowest level since May 2020, it still has plenty of room to move lower.

Chart, histogramDescription automatically generated

Figure 4

For context, I wrote previously:

“To explain the chart above, the red line depicts the price of gold over the last ~21 years, while the green line depicts the copper/U.S. 10-Year Treasury yield ratio. As you can see, the two have a tight relationship: when the copper/U.S. 10-Year Treasury yield ratio is rising (meaning that copper prices are rising at a faster pace than the U.S. 10-Year Treasury yield), it usually results in higher gold prices. Conversely, when the copper/U.S. 10-Year Treasury yield ratio is falling (meaning that the U.S. 10-Year Treasury yield is rising at a faster pace than copper prices), it usually results in lower gold prices.”

As the star of the ratio’s show, the U.S. 10-Year Treasury yield has risen by more than 47% year-to-date (YTD) and the benchmark has surged by more than 163% since its August trough.

Please see below:

Chart, line chartDescription automatically generated

Figure 5

On Jan. 15 , I warned that the U.S. Federal Reserve (FED) had painted itself into a corner. With inflation running hot and Chairman Jerome Powell ignoring the obvious, I wrote that Powell’s own polices (and their impact on real and financial assets) actually eliminate his ability to determine when interest rates rise.

As a result, the central bank had two options:

  1. If they let yields rise, the cost of borrowing rises, the cost of equity rises and the U.S. dollar is supported (all leading to shifts in the bond and stock markets and destroying the halcyon environment they worked so hard to create).
  2. To stop yields from rising, the U.S. Federal Reserve (FED) has to increase its asset purchases (and buy more bonds in the open market). However, the added liquidity should have the same net-effect because it increases inflation expectations (which I mentioned yesterday, is a precursor to higher interest rates).

Opening door #2, Powell’s deny-and-suppress strategy is now playing out in real time. On Feb. 23 – testifying before the U.S. Senate Banking Committee – the FED Chairman told lawmakers that inflation isn’t an issue.

“We’ve been living in a world for a quarter of a century where the pressures were disinflationary,” he said…. “The economy is a long way from our employment and inflation goals.”

And whether he’s unaware or simply ill-informed, commodity prices are surging. Since the New Year, oil and lumber prices have risen by more than 24%, while corn and copper prices are up by more than 14%.

Please see below:

Chart, line chartDescription automatically generated

Figure 6

In addition, relative to finished goods, the entire basket of inputs is sounding the alarm.

Chart, histogramDescription automatically generated

Figure 7

To explain the chart above, the blue line is an index of the price businesses receive for their finished goods. Similarly, the green line is an index of the price businesses pay for raw materials. As you can see, the cost of doing business is rising at a torrent pace.

More importantly though, Powell’s assertion that inflation is an urban legend has been met with eye rolls from the bond market . To repeat what I wrote above: Powell’s own policies (and their impact on real and financial assets) actually eliminate his ability to determine when interest rates rise.

Case in point: the U.S. 10-year to 2-year government bond spread is now at its highest level since January 2017.

Please see below:

Chart, line chartDescription automatically generated

Figure 8

To explain the significance, the figure is calculated by subtracting the U.S. 2-Year Treasury yield from the U.S. 10-Year Treasury yield. When the green line is rising, it means that the U.S. 10-Year Treasury yield is increasing at a faster pace than the U.S. 2-Year Treasury yield. Conversely, when the green line is falling, it means that the U.S. 2-Year Treasury yield is increasing at a faster pace than the U.S. 10-Year Treasury yield.

And why does all of this matter?

Because the above visual is evidence that Powell has lost control of the bond market.

At the front-end of the curve, Powell can control the 2-year yield by decreasing the FED’s overnight lending rate (which was cut to zero at the outset of the coronavirus crisis). However, far from being monolithic, the 5-, 10-, and 30-year yields have the ability to chart their own paths.

And their current message to the Chairman? “We aren’t buying what you’re selling.” As such, the yield curve is likely to continue its steepening stampede.

Circling back to gold, all of the above supports a continued decline of the copper/U.S. 10-Year Treasury yield ratio. With yields essentially released from captivity, even copper’s 8.02% weekly surge wasn’t enough to buck the trend.

As a result, gold’s recent strength is likely a mirage. The yellow metal continues to bounce in fits and starts, thus, it’s only a matter of time before the downtrend continues. Furthermore, with the USD Index still sitting on the sidelines, a resurgent greenback would add even more concrete to gold’s wall of worry.

And speaking of gold’s wall of worry, the sentiment surrounding it is far from being negative.

Graphical user interfaceDescription automatically generated

Figure 9 – Source: Investing.com

The above chart shows the sentiment of Investing.com’s members. 64% of them are bullish on gold. As you can see above, there are also other popular markets listed: the S&P 500, Dow Jones, DAX, EUR/USD, GBP/USD, USD Index, and Crude oil. The sentiment for gold is the most bullish of all of them. Yes, the general stock market is climbing to new all-time highs every day now, and yet, people are even more bullish on gold than they are on stocks.

When gold slides, the sentiment is likely to get more bearish and particularly high “bearish” readings – say, over 80% would likely indicate a good buying opportunity. Naturally, this is not the only factor that one should be paying attention to.

The bottom line? As it stands today, being long the precious metals offers a poor risk-reward proposition. However, in time (perhaps over the next several months), the dynamic will reverse, and the precious metals market will shine once again.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

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 subject to change without notice. Opinions and analyses are 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 deemed 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.

 

US Stock Market Daily Recap: Shortest Stock Correction Ever

It was an overdue plummet- at least that’s what I thought at the start of the day. The Dow was down 360 points at one point, and the Nasdaq was down 3%.

But by the end of the day, Jay Powell played the role of Fed Chair and investor therapist and eased the fears of the masses.

The Dow closed up, the S&P snapped a 5-day losing streak, and the Nasdaq only closed down a half of a percent!

You really can’t make this up.

The day started gloomily with more fears from rising bond yields.

Sure, the rising bonds signal a return to normal. But they also signal inflation and rate hikes from the Fed.

But Powell said “not so fast” and eased market fears.

“Once we get this pandemic under control, we could be getting through this much more quickly than we had feared, and that would be terrific, but the job is not done,” Powell said .

He also alluded to the Fed maintaining its commitment to buy at least $120 billion a month in U.S. Treasuries and agency mortgage-backed securities until “substantial further progress is made with the recovery.

While the slowdown (I’d stop short of calling it a “downturn”) we’ve seen lately, namely with the Nasdaq, poses some desirable buying opportunities, there still could be some short-term pressure on stocks. That correction I’ve been calling for weeks may have potentially started, despite the sharp reversal we saw today.

Yes, we may see more green this week. But while I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.

Bank of America also echoed this statement and said, “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”

With more earnings on tap for this week with Nvidia (NVDA) on Wednesday (Feb. 24) and Virgin Galactic (SPCE) and Moderna (MRNA) on Thursday (Feb. 25), buckle up.

The rest of this week could get very interesting.

Look. Don’t panic. We have a very market-friendly monetary policy, and corrections are more common than most realize. Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.

A correction could also be an excellent buying opportunity for what could be a great second half of the year.

My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

With that said, to sum it up:

While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.

Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

 Nasdaq- To Buy or Not to Buy?

Figure 1- Nasdaq Composite Index $COMP

What a difference a few weeks can make!

Before, I was talking about the Nasdaq’s RSI and to watch out if it exceeds 70.

Now? As tracked by the Invesco QQQ ETF , the Nasdaq has plummeted by 4.5% since February 12 and is trending towards oversold levels! I hate to say I’m excited about this recent decline, but I am. This has been long overdue, and I’m sort of disappointed it didn’t end the day lower.

Now THAT would’ve been a legit buying opportunity.

While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony. Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?

Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after today, I feel more confident in the Nasdaq as a SHORT-TERM BUY.

But remember. The RSI is king for the Nasdaq . If it pops over 70 again, that makes it a SELL in my book.

Why?

Because the Nasdaq is trading in a precise pattern.

In the past few months, when the Nasdaq has exceeded 70, it has consistently sold off.

  • December 9- exceeded an RSI of 70 and briefly pulled back.
  • January 4- exceeded a 70 RSI just before the new year and declined 1.47%.
  • January 11- declined by 1.45% after exceeding a 70 RSI.
  • Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.

I like that the Nasdaq is below the 13500-level, and especially that it’s below its 50-day moving average now. I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

But the pullback hasn’t been enough.

Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.

For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be 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, Matthew Levy, 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. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s 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. Matthew Levy, 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.

 

What Is Next For Silver/Gold? Follow Treasuries and Commodities

Gold continues to wallow near its recent low price level, near $1765.  Silver has continued to trend moderately higher – but still has not broken out to the upside.  Many analysts have continued to estimate when and how metals will begin the next wave higher.  My research team and I believe we’ve found some answers to these questions and want to share our research.

Silver Explodes In Late-Stage Excess Rallies

The first thing we want to highlight is that Silver tends to rally excessively in the later stages of any precious metals rally.  For example, in mid-2010, Silver began an incredible upside price rally after Gold rallied from $720 (October 2008) to $1265 (June 2010).  This suggests that the price relationship between Gold and Silver “dislocated” in the early stage breakdown of the financial markets near the peak of the 2008-09 Housing Crisis Peak.  Then, in late 2010, Silver began to move dramatically higher while Gold continued to push an additional 80%+ higher.

The Silver rally in 2010~11 is clearly evident on this Silver/Gold Weekly chart, below.  The lack of any Silver price advance compared to Gold prior to the 2010 rally is also evident.  One interesting fact relating to how Silver reacted to the 2008~09 Housing Crisis is the deep collapse we see on the left edge of this chart.  A similar collapse happened just recently as COVID-19 shocked the global markets in 2020.

One key aspect we found very interesting is how Silver recovered moderately slowly in 2009~10 before launching into an incredible breakout rally in late 2010 – nearly 15 months after the bottom.  Currently, after the COVID-19 bottom, Silver has rallied a bit more aggressively and quickly.  While Gold has languished below $1800 recently, Silver has continued to gain value compared to Gold.  This new dynamic may suggest the current setup in Precious Metals is transitioning into the late-stage excess rally much quicker than in 2009-10.

Treasury Yields Drive Explosive Trends In Silver

How do Treasury Yields relate to price action in Silver?  The first thing we need to understand is that Silver can rally while Yields are rising or falling.  What happens when Yields rise over long periods of time is that Silver will tend to attempt to find support while trending moderately higher.  Eventually, if fear subsides in the global markets, Silver may fall in price in the later stages of rising Yields.

As you can see on the Treasury Yield to Silver chart below, Yields collapse in 2008 & 2009, as the Housing Crisis unloaded on the global markets.  Yields also collapsed in 2020 as COVID-19 shocked the global markets.  In 2009-10, interest rates collapsed and Yields collapsed until late 2013.  Silver continued to form a base in 2015~16 as Yields rose and peaked.  Near the peak in Yields in 2018, Silver continued to attempt to establish a bottom.

What we find interesting related to this chart is the steep collapse in Yields after the 2018 peak and the recent rally in both Yields and Silver.  We believe Yields may stall and begin to move lower – resulting in another rally attempt in Silver and Gold.  We believe the recent rally in Yields is a reaction to the deep lows related to COVID-19 and that Silver is representing a price pattern similar to 2008-09 – a deep low, followed by a moderately strong price recovery.  Yields could stay low for much longer than many people expect if our research are correct.

If Yields continue to stay near or below current levels, the lowest ever experienced in recent history, then Silver should begin another rally attempt very quickly – possibly within just a few weeks.  The question becomes, what would prompt Yields to fall quickly from current levels?  Could some type of global credit or financial crisis be brewing again?

Commodities & Metals Align

Last but not least, we want to highlight the correlation between commodities and Silver/metals.  When commodities prices rise, in general, Silver rises as well.  The Monthly Commodity & Silver chart, below, highlights the rally in Commodities in 2010~2011 as well as the incredible rally in Silver that took place at the same time.  Now, focus on the hard right edge of this chart and pay attention to the rally in Commodities and Silver that has taken place over the past 12+ months.  What is brewing is that Commodities are rallying from a deep bottom that has taken over 9 years to complete.  The continued decline in commodities since 2011 has prompted a very strong price recovery attempt after the COVID-19 deep lows.  Silver has reacted to this rally in Commodities, like it usually does, to prompt a fairly strong upside price trend.

Recently, though, Silver has stalled while Commodities prices have rallied.  This suggests that Silver is congesting in a new momentum base and should begin an explosive upside price rally – comparable to the rally we are seeing in Commodities.  Commodities have rallied near 20% over the past 12 weeks while Silver has nearly the same amount over the same span of time.  From the COVID-19 lows, the Commodity Index rallied nearly 22% while Silver rallied more than 127%.  If Silver were to maintain this ratio, the 20% rally in Commodities should prompt a 110% rally attempt in Silver.

Given our research related to how Silver has moved compared to Gold, Treasuries, and Commodities, we believe Silver is basing and building momentum for a big breakout rally.  We believe the upside move in Yields has put pressure on Silver and Gold recently to stall/consolidate.  We believe Commodities are building strong upside price momentum which should push Gold and Silver higher.  As the Commodity rally continues while Gold and Silver stall, an incredible amount of upside price momentum builds up over time.  When it breaks, it could be very explosive.

A change of direction in Yields could prompt Silver and Gold to resume a strong upside price trend. Either way, as long as Commodities continue to rally and Yields begin to stall or more sideways, Gold and Silver are poised to attempt another advancing leg higher.

Our research team believes Gold and Silver are poised to make another big price advance.  We wish we could tell you exactly when it will happen – but we can’t.  Our estimate is that within the next 2 to 4 weeks, continued pressures will likely push both Gold and Silver into an upside breakout price trend.  We believe the amount of rally pressure that is building in Gold and Silver is immense.  Time will tell if we are correct or not.

For those who believe in the power of trading on relative strength, market cycles, and momentum but don’t have the time to do the research every day then my BAN Trader Pro newsletter service does all the work for you with daily market reports, research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my premium subscribers.

For a look at all of today’s economic events, check out our economic calendar.

Stay safe and warm!

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

 

Precious Metals May Decline Before Their Next Attempt to Rally

My team prepares Custom Valuations Index charts to understand how capital is being deployed in the global markets alongside US Dollar and Treasury Yields.  The purpose of the Custom Index charts in this article is to provide better insight into and understanding of underlying capital movements in various market conditions.  Recently, we discovered the Custom Index chart shares a keen alignment with Gold (and likely the general precious metals sector).  Let’s explore our recent analysis to help readers understand what to expect next in precious metals.

Weekly custom valuations index chart

The first thing that caught my attention was the very clear decline in the weekly Custom Valuations Index recently, as can be seen in the chart below.  The second peak on the Custom Valuations Index chart occurred on the week of August 3, 2020.  Gold also peaked at this very same time.  This alignment started an exploratory analysis of the Custom Valuations Index and the potential alignment with the precious metals sector.

The peak in the Custom Valuations Index on March 20, 2020 (near the height of the COVID-19 market collapse) presented a very clear upside target which was confirmed with a second peak level in August 2020.  The fact that the Custom Valuations Index reached that peak level again and that peak level also aligned with the peak price in Gold may just be a coincidence.  As we continue to explore this unique alignment, we’ll explore more unique characteristics to see if there is a link that is more than mere chance.

There have been two very clear Pennant/Flag formations as you can see on the above weekly Custom Valuations Index chart.  The first one is highlighted in BLUE and the second one is highlighted in GREEN.  In both of these instances, the Custom Valuations Index broke lower and Gold followed this trend.  Currently, the Custom Valuations Index has begun to breakdown into a new bearish trend. This suggests that Gold and Silver may also move lower as this Custom Index attempts to find a bottom.

Now, let’s do a more in-depth analysis of Gold and the Custom Valuations Index.  In the following charts, we’ve attempted to highlight key price traits that took place in Gold over the past 9+ years and wanted to see if these key price points were reflected in the Custom Valuations Index chart.  The purpose of this is to identify if our assumption that the Custom Valuations Index chart is aligned to Gold (in some way) shows any additional (past price) alignment to validate our thinking.

Weekly Gold chart

First, we’ll start with a Weekly Gold chart that highlights key price points, peaks, bottoms, and breakout/breakdown events.  We want to see if the Custom Valuations Index chart also aligned with these key price moves/dates.

The following Gold Futures Weekly chart highlights the Appreciation/Depreciation cycles we’ve identified in earlier research as well.  The GREEN ARCs near the bottom of the chart show you where each cycle starts and stops.  The RED descending line represents a Depreciation Cycle and the GREEN Ascending line represents an Appreciation Cycle.  We are focusing on the September 2011 peak price in Gold and the key price events after the “Failure Peak” that took place to set up the bottom in early 2015, the rally in early 2016, and the breakout rally in June 2019.  Does the Custom Valuations Index chart show these same characteristics and dates?

Weekly Customs Valuation Chart and Gold Price History

This next chart is the Weekly Custom Valuations Index chart with the same highlighted price points/dates.  The first thing we see from this chart is that the “Failure Peak” (October 2012) was a higher price peak on this Custom Index chart than the setup on the Gold chart at the same time.  Thus, the Custom Valuations Chart represented the extended “excess phase” top in Gold as a continued upward trend.  The downtrend after the October 2012 peak on this Custom Valuations Index chart does align with the big breakdown on the Gold chart (above).

Additionally, the early 2015 bottoming on the Custom Index chart represented a very early sign that Gold may be looking for a bottom as well.  Gold did move lower throughout the next 11+ months, but so did the Custom Valuations Index price. It makes sense that the Custom Valuations Index may be representing underlying key market dynamics that could be applied to the Gold chart in some way.

The Initial Gold Rally in February 2016 was the first real clear trigger on both these charts that coincided with a breakout/rally trend in Gold.  This rally attempt eventually stalled near the end of 2016 and began an extended “momentum base” setup.  Notice how the Custom Valuations Index chart represented this momentum base as and extended sideways Pennant/Flag formation that ended near June 2019.  Also, notice how the stalling in the Custom Valuations Index chart initiated many weeks before Gold actually peaked in 2016.

From the February 2019 Breakout, we can clearly see the impressive rally in the Custom Index chart aligned with a big rally in Gold.  What is interesting is the DUAL PEAK in the Custom Index chart that first setup from the lows of the March 2020 COVID-19 bottom.  Could it be that extreme price move somehow represented a key future target for Gold and for the Custom Index chart?

There is very little corresponding data to compare to – so we’ll have to continue to try to dig deeper for any confirmation of this unique setup. Yet, we can’t underestimate the DUAL PEAK setup on the Custom Index chart and the fact that the second peak, August 2020, also aligned perfectly with the current peak price in Gold. Since that August 2020 peak, both Gold and the Custom Index chart have continued to breakdown and trend lower.  It makes sense that Gold will continue to move lower, in alignment with the Custom Index chart, attempting to find a new bottom/momentum base.  We believe the 200 to 240 level on the Custom Valuations Index chart may be a suitable range for this new bottom.

One thing we can say with a moderate degree of certainty is that the Custom Valuations Index chart appears to lead the precious metals in many instances and it appears to perfectly align in other instances.  Our research suggests the US and global markets have recently entered a Depreciation Cycle phase which may last many years.  The Custom Valuations Index chart is suggesting that the US, global and precious metals sectors are weakening and attempting to find/set up a new momentum/base.

This would suggest that capital will move away from precious metals as well as major market sectors and attempt to find opportunities in undervalued or other hot sectors.  Eventually, once the new momentum base/bottom is firmly established in Gold and the Custom Valuations Index chart, the US and Global major market sectors will likely resume a very strong upside price trend.

The key take-away from this research is that sector rotations related to precious metals, major global markets and potential early warning signs of strength or weakness may be attainable by focusing on how the Custom Valuations Index trends in comparison to Gold and the major indexes.  Currently, the Custom Valuations Index is suggesting that precious metals will move lower and try to find a new bottom/base.  This means other market sectors will perform better than precious metals for a period of time.

This is also an important reason to focus your attention on finding the best and hottest sectors for new trade opportunities.  When broad components of the market enter bearish trends, like the Custom Valuations Index is suggesting for precious metals, it is best to have a proven system for identifying the best sector trends and trade opportunities.  While one sector may stall, others are rallying.  Long term success is found by focus your trading capital on the strongest opportunities while avoiding weaker trends.

2021 is going to be full of these types of trends and setups.  Quite literally, hundreds of these setups and trades will be generated over the next 3 to 6 months using my BAN strategy.  You can learn how to find and trade the hottest sectors right now in my free one-hour BAN tutorial.

For a look at all of today’s economic events, check out our economic calendar.

Enjoy your weekend!

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

 

Higher Yields Hit Gold, But for How Long?

Last week, the yellow metal tanked below $1,900 again, and it hasn’t rebounded since the plunge – instead, the price of gold has stayed at around $1,850.

What happened? The main driver of the recent weakness in the precious metals market has been the Democratic victory in the Georgia Senate elections. Thanks to this trifecta, the Democrats have taken control of the White House, the House of Representatives, and the Senate. Consequently, there are lower chances of a political gridlock in Washington and higher chances of smooth cooperation between Congress and the incoming administration of Joe Biden. So, the expectations of additional economic support have risen, thereby strengthening hopes for a quicker economic recovery.

Hence, investors went euphoric and increased their risk appetite. They sold safe havens such as gold and disposed of treasuries, pushing the bond yields higher (see the chart below), which in turn hurt the yellow metal .

However, the interest rates are still historically low, and the real interest rates remain deeply in negative territory. Although some measure of normalization is standard, the return to pre-pandemic levels is unlikely . The unprecedented increase in worldwide debt implies that we are stuck in a high debt and low interest rate trap. After all, all these debts have been sustainable only because the yields have been low, so I doubt whether we will see an important rebound in them.

But the recent episode shows how sensitive gold is to the changes in the real interest rates and that gold investors  shouldn’t forget about the possibility of an increase in the real interest rates, which is a serious downward risk for gold.

Implications for Gold

Is gold doomed now, given that the Democrats swept both the White House and Congress? Not necessarily. The macroeconomic outlook for 2021 might be worse than for 2020, as the economy should recover and monetary policy should be less dovish – but it’s still positive for gold. After all, historically, gold has shined during the early phases of various economic recoveries. Some analysts even claim that we have not reached the phase of an economic recovery yet – as the liquidity crisis has transformed into a solvency crisis.

In other words, it’s always important to distinguish the short-term outlook from the longer-term potential. Gold currently suffers because of the higher yields, but the long-term picture seems to be more positive. The real interest rates, which are more important for the precious metals market, have increased to a lesser extent – and they have stayed well below zero (as the chart above shows).

At some point, investors will start factoring in that a large fiscal stimulus projected by the Democrats could increase the public debt to uncomfortable levels, thereby increasing the risk of a sovereign debt crisis . They could also begin pricing in the risk of higher inflation and a larger Fed’s balance sheet , as the U.S. central bank and the Treasury wouldn’t welcome much higher interest rates . As a reminder, gold benefited from the easy fiscal policy in the aftermath of the first wave of the coronavirus pandemic , so it shouldn’t go out of favor now. Indeed, the huge fiscal deficit combined with the current account deficit will take the so-called twin deficit to a record 25 percent of the GDP , which shouldn’t be without an impact on the price of gold.

Instead, gold still has a material upside in the upcoming months, although it could shine less brightly than it did last year , at least until inflation rebounds, or until the Fed expands its accommodative monetary stance. Yes, the U.S. central bank remains dovish, but it’s not eager right now to shoot from its bazooka again. So, the monetary policy will be relatively more hawkish than it was in 2020, which could limit potential gains in the gold market.

If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Arkadiusz Sieron, PhD
Sunshine Profits: Effective Investment through Diligence & Care

 

Copper & Bonds Telegraphed the 2020 COVID Collapse

A very interesting setup in both Copper and Bonds seemed to have telegraphed the collapse in the US stock market in early 2020.  T-Bonds, which had been consolidating into a downward price channel prior to the COVID outbreak, suddenly broke through the downward price channel and started to accelerate higher. Copper, which is a fairly common commodity for building, infrastructure, and other uses, had been moving higher above a clear upward price channel, then suddenly broke lower in early 2020.  Both Bond and Copper seemed to break these price channels nearly 20+ days before the US stock markets initiated their price decline on February 24, 2020.

My research team and I believe this setup is not inconsequential for technical traders. The breakdown in Copper represents a core “demand” failure, while the breakout in Bonds suggests risks are elevating. This is something we should continue to watch for in the future as Copper and Bond prices typically move before the US stock market begins to react.

THE 2020 COPPER/BONDS DIVERGENCE SETUP

The following Daily chart showing the setups and breakdowns/breakouts of the DOW, Copper and Bonds clearly show the early breakout in Bonds and the subsequent breakdown in Copper – nearly 20+ days before the INDU (Dow Jones Industrial Average) began to breakdown and accelerate lower.

It makes sense that Bonds and a highly utilized commodity like Copper would reflect a change in demand or elevated fear just before a contagion event takes place.  Consumers, manufacturers, and builders, as well as traders and investors, were all able to see the writing on the wall in this case.  Will any future contagion event be similar?  Will Copper and Bonds react to fears and demand concerns 10 to 20+ days before the next downside price event?

THE CURRENT COPPER/BONDS SETUP (STILL BULLISH)

Currently, the US markets are in a bullish price phase.  We’ve written extensively about how the markets are experiencing an unprecedented bullish/rally phase which we believe to be a euphoric/speculative phase of the broader trend.  Still, one can’t ignore the strength and momentum behind this current bullish trend and take a pessimistic view of the markets.

The Current INDU, Copper, and Bonds chart, below, highlights the strength and momentum of the current bullish INDU price trend. Even though Bonds appears to be very close to the downward sloping price channel, we have yet to see a real upside price trend in Bonds which would indicate fear has started to reengage in the markets.  Additionally, Copper is trading solidly above the upward sloping price trend which suggests demand for copper is still quite strong.

As long as the bullish trend continues, we would expect Bonds to continue to consolidate below the downward sloping price trend and continue to drift lower while Copper continues to stay above the upward sloping trend line suggesting demand is strong and future expectations have not changed.

When and IF Bonds move above the downward sloping trend line, then we have to watch Copper very closely for a breakdown event.  If we see this take place quickly (within a 5 to 7 day window), then we need to start to prepare for a broad market decline that may happen within 10 to 15+ days of the Bonds/Copper trigger date.

The arrows on the Current Chart above show you what would happen IF a new contagion event were to happen and IF the Copper/Bonds set up replicates itself.  Bonds would begin to rally, Copper would begin to decline, and about 15+ days later, the US stock market would begin to decline.

Again, we believe this setup may be a good way to determine a change in expectations related to the demand for an industrial commodity (Copper) and risk levels related to debt/credit (Bonds) that may trigger a warning before the major markets change trends.  If our research is correct, and the Copper/Bonds markets react to changing expectations before the broader US stock market reacts to the change in sentiment, then this may be a very valid setup for skilled technical traders to stay ahead of the major market trends.

To be clear, the markets are currently in a strongly bullish price phase.  We are not calling for a top or any type of major downside rotation based on this setup today.  We are showing you what happened prior to the 2020 breakdown and suggesting something similar may happen in the future – which may allow you to have an early warning of a major US stock market reversal in trend.

Either way, a skilled technical trader will be able to find success in an uptrend or a downtrend.  Our proprietary BAN (Best Asset Now) strategy allows us to know which assets are potentially the best performers in any type of market trend.  If you want to learn more about how we can help you with our proprietary tools, strategy, and daily analysis then visit our website.

For a look at all of today’s economic events, check out our economic calendar.

Stay healthy!

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

NOTICE AND DISCLAIMER: Our free research does not constitute a trade recommendation or solicitation for readers to take any action regarding this research.  We are not registered financial advisors and provide our research for educational and informational purposes only.

 

Pfizer’s Vaccine and US Elect Generate new Capital Distribution

The light at the end of the tunnel shined brightly on Monday, November 9, creating a new dynamic in the equity markets. Pfizer (PFE), the pharmaceutical giant announced the results of its stage-3 trial for its COVID-vaccine, which showed a robust 90% efficacy. US stocks surged, especially many of the value stocks that have been hammered during the spread of COVID-19. Oil prices roared, and small-cap shares rallied, as investors began to reprice stocks. While it will take some time for Pfizer to produce enough of the vaccine to create herd immunity, this may be the first vaccine that has some real success behind it.

Will There Be Enough Vaccine to Create Immunity

The news that a real vaccine could be available in 2020 means business can get back to growing in due time. Pfizer announced that it would be able to produce 50-million doses in 2020, and 1.3-billion doses in 2021. While the company did not take any money from the US government to produce its vaccine, its partner BioNTech SF did receive almost $450 million from Germany.

The US government did agree to pay $2 billion upfront for 100 million doses of the vaccine and an option for another 500 million doses. Additionally, the US will get to decide who gets the vaccine first, which likely means it will provide it to its citizens before distributing the vaccine globally. It also appears that Pfizer will handle the distribution of the vaccine directly and has designed the reusable containers that keep the vaccine at the cold temperatures necessary to store the vaccine.

Sentiment Soars is Several Sectors

The announcement by Pfizer was a huge relief for traders, investors, and business owners who started to buy equities on this positive news. Several sectors outperformed, and some that did not. Hospitality and leisure, transportation, energy, financials, and real estate rebounded sharply. Oil prices rallied 11%, as investors expect a return to travel especially air travel.

Oil demand has been hammered since the onset of the pandemic. According to the Energy Information Administration, US oil product demand is down 11% year over year. Gasoline demand is also down 11% while distillate demand, which includes diesel and heating oil has declined 7%. The biggest drag on oil demand in the US has been jet fuel demand which is down a whopping 45% year over year.

The introduction of a vaccine means that the ravel sector should have better times ahead and oil consumption should recover to pre-pandemic levels. Oil prices have been in a sliding downward sloping range. A close above $44 per barrel, should lead to a test of the $55-60 region. Since many of the US production and exploration companies need oil prices above $50 to make money, a rally back to profitable levels could lead to further gains in the energy sector.

Small-Cap Shares are Breaking Out

Money is piling into the small-cap stocks Russell 2K index. Small capitalized companies are in desperate need of fiscal stimulus, and the end of the pandemic. Small-cap stocks were the best performing of the US indices rising more than 7% at one point on Monday, November 9. Many of the regional banking companies fall under the Russell 2K. The KRE SPDR Banking Index surged more than 15% on Monday. Trading volume in travel and leisure stocks was up 900% on Monday. Small caps have been dormant since 2018, and are breaking out. The IWM ETF completed an ABC correction wave and is poised to test higher levels. This group of stocks could become the next leading stock index, or at least give the Nasdaq a run for its money!

I am looking at some leading sectors using a BAN trading strategy which allows us to outperform the market during major market rallies.

Redistribution of Assets

Monday was moving day. It appears that investors are confident and money is being pulled out of the precious metals sector and dumped into the risk-on assets (stocks). Gold dropped over 5%, and silver down 7.5%. US treasury yields surged higher, with the 10-year treasury yield rising 12-basis points, which was the largest one-day rally since March 2020. Higher US yields helped buoy the US dollar which paved the way for lower gold prices. Gold prices appear to have tested support near the September lows at $1,848 and are oversold on an intra-day hourly chart as the fast stochastic hit a reading of 7, below the oversold trigger level of 20, which could foreshadow a temporary correction.

The news over the weekend that the US had a new President-elect which was followed by the results of Pfizer’s vaccine results sparked a distribution of capital. It’s a big moving day with big winners and big losers.

Concluding Thoughts:

Investors and large institutions are just starting to rebalance and invest their capital. Until there Biden is in the house and there is more details on the vaccine I expect the market to continue making large swings. Risks are still hight overall so stepping into this market lightly is what we are doing for the time being.

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen
Chief Market Strategies
www.TheTechnicalTraders.com

 

Oil Stocks – Buying Opportunity of a Lifetime

There is no sector more unloved than energy. The relentless bear market forced oil companies to slash exploration projects. We believe this could lead to an unforeseen supply crunch in 2021 as demand surges as global economies recovers.

Quantitative Easing

Can governments print endless amounts of money without causing inflation? Not usually. However, they did get away with it (for the most part) during the 2008 crisis. Back then, the money stayed on bank balance sheets, mostly. This time, the money is entering the system, and there is a lot more of it. This could lead to a perfect storm for higher oil prices this decade and perhaps a generational buying opportunity in stocks.

THE RETURN OF INFLATION

The last time inflation was out of control was during the 1970s. In an inflationary period, investors flee fixed income for assets with inflation protection (real assets and commodities). It does not make sense to be locked into a Treasury yielding 0.7% if inflation annualized is much higher. As a result, investors flee stocks and bonds for hard assets.

I believe the annual inflation rate exceeded 8% in the 70s. By 1979 nobody wanted to own Stocks or Bonds – no matter what they were yielding. Treasuries were considered “certificates of confiscation.” BusinessWeek’s August 1979 issue was titled: The Death of Equities – how inflation is destroying the stock market. At that time, 30-year Treasuries were approaching yields of 10%…no one wanted them (sound like energy today). That period turned out to be a generational buying opportunity for both stocks and bonds.

A close up of a sign Description automatically generated

IS INFLATION DEAD?

Fast-forward 40-years, and here we are again. However, this time the opposite is true. The April 22, 2019 issue of BusinessWeek asks – Is Inflation Dead? with an image of a deflated Dinosaur, i.e., energy. Could this be another contrary indicator? I believe it is, and I think we are on the verge of a new inflation.

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The Bear Market in Energy

Energy has been in a terrible bear market for over 6-years. Producers cut their drilling and exploration projects to almost nothing. Remember, it takes several years from the time of discovery to create a producing well. As demand returns, I believe a lack of supply could lead to shortages later this decade.

Increased Demand 

The global pandemic has reinforced the need to secure supply chains. A global rebuilding effort will result in massive onshoring projects of critical supplies. The infrastructure required and retooling will require a tremendous amount of fossil fuels. Ultimately, I think oil will reach new all-time highs in the 2020s.

Conclusion: Oil is one of the most valuable commodities on the planet. Without energy (oil, coal, uranium, and natural gas), the world would stop. It is essential to everything we do. I do not see how we can have inflation without much higher energy prices. Consequently, I am betting big on an energy comeback.

I started buying energy aggressively in October 2020. Prices could dip a bit further, depending on the elections and more lockdowns. I will continue to accumulate if prices decline.

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. He posts daily updates to Premium Members. For more information, please visit here.

For a look at all of today’s economic events, check out our economic calendar.

 

Silver Junior Miners Reach Flag Apex as Divided Government is Confirmed

In the wake of the US general election, which was one of the biggest American political events in history, there is one result that seems clear cut. As of November 5, two-days post-election day, a divided government appears to be in the cards. The rally in riskier assets, and the selloff of the US dollar, reflects a market that had priced in a “blue wave”, and is now unwinding that trade.

While not all the states have counted all of their votes, it appears that there are enough Senate seats confirmed that show Republicans will hold one chamber of Congress. With this fundamental backdrop, I strongly believe in several stocks that will continue to outperform including the Silver Junior Miner ETF (SILJ).

The SILJ is forming a bull flag pattern on a monthly chart that is a pause that refreshes higher. The 10-month moving average has recently crossed above the 50-month moving average which means that a medium-term uptrend is currently in place. There is solid support near the 10-month moving average near $12 and resistance near the 2020 highs, which is the apex of the flag pattern is seen near $17.21. I believe that a breakout is pending now that there will be a divided government regardless of who wins the presidency.

My target is based on a Fibonacci price extension (100% measured move) to the rally from the COVID-19 lows to the recent highs and extends that range from the September 2020 lows. By using this Fibonacci extension I have identified $20 and $25.32 as my upside price target for any potential breakout.

You can see me talk live with Nicole Petallides on TV where I covered silver miners, the charts and why they are primed and ready for a 40-70% gain from here.

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The impetus that will drive the SILJ higher is a decline in the US dollar and the view that global growth will slowly return despite the acceleration in the spread of COVID-19. The dollar index is forming a weekly bear flag pattern which is a pause that refreshes lower. With all of the fanfare focusing on the election, many investors have ignored recent weaker than expected US economic data. Private payrolls came in worst than expected and the more forward-looking ISM services report showed a decline in sentiment. The US 10-year yield has dropped 15-basis points since the election and is currently trading near 75-basis points down from 90-basis points on Tuesday, November 3. As the yield differential moves against the US dollar, silver as well as the SILJ should gain traction.

One caveat is that if riskier assets like equities drop, metals and mining stocks will also fall. This is an impulse contraction in price that occurs because of risks and fear, but it is very real. From July 2018 to June 2019, SILJ contracted almost 40%. This is an important risk component to consider when reviewing the current setup in SILJ.

In July through August 2018, the price of silver was kept down given that that the US Federal Reserve continued to raise interest rates – eventually prompting a -20% price collapse in the SPY starting near October 1, 2018. SILJ lead this move lower and didn’t bottom until June 2019 – when the SPY had recovered to near all-time highs. Thus, this setup in SILJ does include a fairly strong measure of risk which should be mitigated following an election that has ensured a divided government.

This Weekly SILJ chart, below, continues to form a bull flag continuation pattern which is expected to test resistance near the 2020 highs at $17.21. Our research team believes that this critical resistance level, once breached, will likely prompt a moderately strong upside price trend in SILJ. Failure to breach this level will likely result in a continued flagging price formation attempting to retest the 30-week moving average which is robust support near $13.00.

Please review the data we’ve provided within this research post before making any decisions. There is a moderately high degree of risk associated with this current Pennant/Flag setup. Having said that, we do believe that a breakout or breakdown move is very close to initiating and we believe the critical level to the upside is the $15.05 resistance level. Traders should understand and acknowledge the risks associated with this setup, and also understand that any breakdown price event could be moderately dangerous with quick price action to the downside.

We believe there are a number of great opportunities setting up in the markets right now. Various sectors and price setups have caught our attention – this SILJ setup being one of them. We believe the next 6+ months will present some great trading opportunities for those individuals that are willing to “wait for confirmation” of the trade entry. The one thing we’ve tried to make very clear within this article is this “setup” is not a trade entry trigger. There is far too much risk at this point for us to initiate any entry or trade, and we will make the call to trade once we have the signals we seek. Confirmation of this trade setup is pending – but it sure looks good at this point.

Chris Vermeulen

Chief Market Strategist

www.TheTechnicalTraders.com

US Dollar Has A Lot Of Upside Potential – Part III

  • Presidential election cycles drive US Dollar trends.
  • US Dollar expected to rise before the election and then stall right before the day of the election.
  • Money will start shifting away from the stock market now, and traders will likely target safe-haven investments and undervalued traditional investments (dividends, blue chips, utilities, energy, bonds, consumer service and supplies, and possibly technology suppliers) going forward.
  • The potential for a US Dollar upside price rally after the elections (just like the 2013~2014 setup) is a very valid expectation from a technical analysis perspective.

This is the final part of our three-part US Dollar research article. My research team’s belief is that the US Dollar will recover in value before the US Presidential Election, then stall right before the election date as traders attempt to digest the outcome of the election.  In this final part of our research article, we’re going to share insights and technical analysis setups that we believe support our predictions on the US Dollar.  Please take a minute to review Part I and Part II of this research series if you have missed any portion of it.

Our research team has highlighted a price pattern in the US Dollar that seems to be fairly consistent over the past 8+ years.  This pattern suggests the US Dollar will move higher over the next 60+ days, which may likely correlate with the US stock market stalling and/or moving lower. Just prior to the November 3, 2020 election date, the US Dollar should stall as global traders and investors await the results. After the election is complete, then we watch the scramble as global traders and investors attempt to reposition assets to take advantage of perceived opportunities.

CUSTOM SMART MONEY SETTING UP A HEAD-AND-SHOULDERS TOP

We are going to start by reviewing our Custom Smart Money Index Weekly chart, below.  This Smart Money Index chart highlights the triple-top pattern that appears to be setting up after the COVID-19 collapse.  We find this important because the “true smart money peak” in the US stock market occurred near the peak in January/February 2018.

Therefore, our researchers believe the true organic growth peak in the US and global markets occurred well over 2 years ago – not throughout the new price peaks we’ve experienced in the US markets after the COVID-19 collapse.  Those, secondary price peaks, were speculative peaks – not organic economic growth peaks.  And speculative peaks tend to end in explosive contraction events.

Without getting into politics, policies or other aspects of the 2020 US Presidential Election, there are only 60+ days left for skilled traders and investors to prepare for either a Trump or Biden Presidency.  Each candidate has outlined numerous objectives, tax policies and spending plans.  All of the translates into how consumers and businesses plan for and prepare to operate within these potentially new economic constructs.  When you stop and think about the potential differences between a Trump second term and a new Biden term – the stakes for investors and traders are much higher than many expect.

Because of this high-stake US Presidential election, we believe global traders and investors will begin to move assets away from the high-flying US stock market and away from excessive risks.  Traders will instead likely target safe-haven investments and undervalued traditional investments (dividends, blue chips, utilities, energy, bonds, consumer service and supplies and possibly technology suppliers) going forward.

My research team believes the transition away from the high-flying technology sectors and S&P sectors will be a move into protection – away from risks relating to a potential collapse in the US stock market.  We believe the triple-top in our Custom Smart Cash Index clearly illustrates how the US and global stock market is functioning – even though the price charts for the NASDAQ and S&P 500 charts show moderately higher price levels.  This Custom Smart Cash Index shows a clear Head-and-Shoulders pattern setting up – which is a strong indication that another decline in price levels may be in our immediate future.

COMPARISON CURRENCY ANALYSIS SHOWS US DOLLAR MAY RALLY 5% OR MORE

This comparison chart, below, comparing the Asian currencies and the US/Western currencies highlights another technical pattern that we believe substantiates a potential US Dollar rally over the next 60+ days.  The Custom Asian to US/Western currency index chart is the Candlestick price chart while the US Dollar Index is shown on this chart as the BLUE LINE on this chart.

What we want you to focus on is how the Asian to US/Western index tends to parallel the US Dollar Index more than 80% of the time on this chart.  Yet, we also want you to focus on the times when the US Dollar Index (the BLUE LINE) varies away from the Custom Index price levels. We found this very interesting as the US Dollar Index tends to react in ways that leads and lags the price correlation of the Custom Index.

We also believe the current extreme low price level in the US Dollar Index is similar to the 2013~14 area on this chart – where the US Dollar was pushed lower because the US stock market continued to rally to new highs and traders/investors concerns were the “fear of missing out” of the rally.  When this happens, global traders pile into the US stock market and ignore the US Dollar.  Who cares that the US Dollar lost 3% to 4% of value when the US Stock market just rallied 13% to 20% over the past 16+ months.

Yet, the minute the US stock market enters a period of consolidation, sideways trading and concern, then everyone suddenly cares what’s happening with global currencies and the US Dollar because 8% to 15%+ rotations in the stock market while the US Dollar is falling 3% to 5% or more can really hurt foreign investors.

We believe the current setup on the right side of this Asian to US/Western currency correlation chart is very similar to what happened in late 2013 – where the correlation price index rose to a peak near 38 – then stalled into a narrow sideways channel.  The US Dollar Index collapsed throughout this span of time and then suddenly started to gain in value in late 2014 – right near the peak in the markets before the 2015/2016 US stock market (which also correlated with the start of the 2016 Presidential Election campaigns).

Imagine what would happen if a similar rally in the US Dollar took place after the 2020 elections and how that will reflect as global investors pile into the US markets with a stronger US Dollar.

As technical traders, we attempt to identify and analyze these types of technical patterns as well as price patterns and other advance price theory. Our job is to try to find hidden, often somewhat secret, correlations in price, technical patterns, seasonal patterns or cross-market trends so our members can profit from these setups.  When we’re right, we try to take advantage of these setups and alert our members to the trade setups as they happen.  When we’re wrong, we take our losses – just like everyone else.

We believe this setup in the US Dollar Index could be a very valid technical price trigger that could prompt a big rally in the US Dollar and US Stock market.  We believe the rally in the US stock market may start to to really shape up in late 2021.  Yet, everything depends on what happens over the next 90+ days and how the US elections turn out.  This year, the one thing we’re not going to try to predict is the results of the US Presidential elections – that’s not our specialty.  We do believe the potential for a US Dollar upside price rally after the elections (just like the 2013~2014 setup) is a very valid expectation.

Either way, we’re going to be here to help you find these incredible setups and great trades.  Think about how a big rally in the US Dollar will result in a massive influx of capital from foreign investors and institutions.  It is a very real possibility at this point – stay tuned for more from our research team.

Isn’t it time you learned how my research team and I can help you find and execute better trades?  Do you want to learn how to profit from market moves? Our technical analysis tools have shown you what to expect months into the future, so sign up for my Active ETF Swing Trade Signals today to learn more!

For a look at all of today’s economic events, check out our economic calendar.

Stay safe and healthy!

Chris Vermeulen
Chief Market Strategist
Founder of Technical Traders Ltd.

NOTICE: Our free research does not constitute a trade recommendation, investment or trading advice, or solicitation for our readers to take any action regarding this research.  It is provided for educational purposes only.  The Technical Traders research team produces these research articles to share information with you in an effort to try to keep you well informed.

 

Could Gold Reach $7,000 by 2030?

This bull market can be more positive than the previous one both for gold and the mining stocks.

In the last edition of the Fundamental Gold Report, I analyzed various WGC’s reports on the gold market. Today, I will focus on the issues of Alchemist – the flagship publication of the London Bullion Market Associations – I was unable to discuss during the most acute phase of the pandemic and the following economic crisis.

I’ll start with the article “Is there a place of Gold Equities in a Gold Allocation?” by James Luke from issue no. 96. The Author poses title question because gold equities performed poorly relative to the gold prices over the last 10 or even 20 years, and “investors would have been better served staying well away.” Indeed, while the gold price is up more than 250 percent since 2005, the HUI Gold Index is just about 20 percent higher.

Wow, it was a harsh criticism! But justified given the fact that although in theory mining stocks provide a leveraged way to own exposure to movements in commodity prices, in reality many miners lag behind the physical market. This is why I always warn investors that investing in gold shares is very demanding, as mining stocks are not a perfect play on gold or other metals. In other words, investing in miner’s equity is a whole different kettle of fish, as “the stocks are not a safe haven against market turmoil, but a bet on company’s operating earnings and the management team which controls it”. Indeed, the problem of gold equities over the last decades was – according to Luke – that “yes, you had higher prices, but no, the industry did not capture margin, and no, the industry did not generate returns”.

However, that may change now. The Author believes that producers are facing now a friendlier environment in which they could be able to capture profit margins far greater than in the past. You see, in the 2000s, gold was rallying together with other commodities and with its own input cost base, which cannibalized the margins. But the current gold’s rally is more monetary-based than commodity-based, which supports gold prices but remains cost inflation limited.

Gold Resilient in Adversity

Another interesting article from the Alchemist, this time from issue no. 97, is “Gold Resilient in Adversity” by Rhona O’Connel. She compares gold with other commodities, pointing out gold has been the outperformer within the sector. While other metals suffered massive demand destruction and price falls of several percent amid the coronavirus crisis, gold has been a “sanctuary from the vicissitudes of the economic environment”. The conclusion is simple: the impressive gold’s performance compared with its commodity peers underlines the safe-haven status of the yellow metal and the fact, emphasized by me for a long time, that gold is more of a monetary asset than a mere commodity.

The Rational Case for $7,000 Gold by 2030

I left the most controversial article from Alchemist issue no. 97 – The Rational Case for $7,000 Gold by 2030 written by Charlie Morris – for last. The Author starts with the observation that gold has been the leading major asset class in the 21st century, which is an extraordinary achievement given that gold doesn’t pay a yield.

Some people believe that because gold doesn’t pay a yield, gold can’t be valued. But Morris disagrees – and he models gold, very interestingly, as a bond with the following characteristics: it is zero-coupon because it pays no interest; it has a long duration because it lasts forever; it is inflation linked, as historic purchasing power has demonstrated; it has zero credit risk, assuming it is held in physical form; it was issued by God.

Wow, what an original bond! The model makes clear why the main driver behind the gold’s gains in this century was the fall in the U.S. real interest rates, as the chart below shows. According to the Author’s model, gold is traded now with premium over its fair value, but investors should not worry, as “it is more likely to rise from here than reverse. That’s because gold is in a bull market and the forces driving it higher far outweigh the forces holding it back.”

In particular, Morris believes that gold simply sees inflation coming in 2021. After all, contrary to the quantitative easing that occurred in the aftermath of the Great Recession, this time the surge in money supply flows into the real economy. Hence, according to the Author, if the long-term inflation expectations rise, together with the gold’s premium, while the bond yields remain ultra low, the price of gold could rationally achieve the level of $7,000. After all, “the huge gains in the 21st century have occurred in an environment with falling rates, while long-term inflation expectations have barely moved. With higher inflation on the horizon, things start to get interesting.”

Although $7,000 sounds to me like an exaggeration, I agree with the article’s main premises: the repercussions of the coronavirus recession could be more inflationary than the Great Recession, and that gold is in the bull market that could last for a while.

If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Arkadiusz Sieron, PhD
Sunshine Profits: Analysis. Care. Profits.

 

Corona Crisis Will Have Lasting Impact on Gold Market

No matter what shape the recovery is, the epidemic will likely have lasting, positive effects on the gold market.

During the most acute phase of the pandemic and the following economic crisis, there was no time to analyze various WGC’s reports on the gold market. Let’s make up for it!

I’ll start with the report “Recovery paths and impact on performance” about the gold mid-year outlook 2020. The World Gold Council notes that gold had a really excellent performance in the first half of 2020, rising almost by 17 percent (see the chart below), much higher than other major asset classes.

Given gold’s impressive gains, adding between 2 and 10 percent in gold to an average investor’s portfolio would have resulted in higher risk-adjusted returns over the pandemic and economic crisis (as well as over the past decade). Similarly, according to a separate WGC’s research, higher allocations to gold would have improved the performance of a typical central bank’s total reserve portfolio during the coronavirus crisis.

When it comes to the future, the WGC points out that expectations for a V-shaped recovery are shifting towards U-shaped or even W-shaped (a double-dip recession). Such transformation keep uncertainty high, supporting save-haven assets such as gold.

However, the key takeaway from the report is that no matter what shape the recovery is, the epidemic will likely have a long-term, positive effects on the gold market, strengthening the role of gold as a portfolio diversifier. According to the former WGC’s analysis of potential impact of coronavirus crisis on the gold market, the deep recession would be, of course the best for the gold prices, but even in the scenario of swift recovery, gold would shine this year and maintain positive returns until 2022, as the Fed would keep its monetary policy loose, while the real interest rates would remain close to zero.

Supply Disruptions Made Gold Prices Disconnected

In a former report entitled “Gold supply chain shows resilience amid disruption,” the WGC notes that the pandemic has caused unprecedented disruption to various parts of the gold supply chain, but the gold market has remained resilient after all.

However, the epidemic and the resulting supply crisis has hit the retail segment, which is more fragmented, has more complex supply chain, and holds less stocks of small gold bars and bullion coins. This is why “the supply and logistical issues caused depletion of some dealer inventories and left many investors facing long wait times and high premiums”. So, not necessarily manipulation, but supply disruptions explain the high premium for coins over spot price.

Interestingly, and somewhat similarly, the logistical disruptions – and not necessarily malicious conspiracy – triggered by the coronavirus and the Great Lockdown caused the widening of the differential between the London spot price and the futures price on Comex, which jumped from $2 to $75 at one point.

Implications for Gold

Not surprisingly, the WGC is, as always, bullish on gold. The organization believes that “the combination of high risk, low opportunity cost and positive price momentum looks set to support gold investment and offset weakness in consumption from an economic contraction”. This time we agree with the WGC. The coronavirus crisis and the following economic crisis and the response of the central banks and governments significantly shifted the already bullish fundamental outlook for gold prices into an even more bullish one, also potentially strengthening the role of gold as a strategic asset.

The thing is that the Fed and other central banks have cut interest rates to zero and reintroduced or expanded the quantitative easing. In consequence, equity and bond prices are elevated, which increases the risk of pullbacks. Moreover, the soaring fiscal deficits and public debts raise concerns about the sovereign-debt crisis, or a long-term run up of inflation. All these risks and uncertainties related to the ongoing pandemic and fragile economic recovery could increase the role of gold as a strategic hedge in investor portfolios.

If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Arkadiusz Sieron, PhD
Sunshine Profits: Analysis. Care. Profits.