Biiwii

How a European views gold...

2012-01-27T11:05:00.000-05:00

Aufwärts tendierend... En hausse... En alza... as measured in the common currency. If gold should clear the current resistance, it is going much higher in euros.

This analysis, if proven out, paints the hysterics in the precious metals sector after the upside panic of last summer as nothing but a winnowing out of the weaklings; the people that bought out of fear and panic and no long term sense of value.

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Attn NFTRH Subscribers: Email Update sent...

2012-01-27T10:43:00.003-05:00

An email update just went out discussing the target on HUI and the support noted the other day. Also, USD's sentiment profile along with that of the broad market is reviewed.

http://www.biiwii.blogspot.com
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Base metals, incl. Cu

2012-01-26T14:29:00.001-05:00

The old GYX chart was getting messy. Here's a new one viewed from a different angle that shows resistance and support. This, and the copper chart below it hint that the rally is getting long in the tooth as it hits its 'copper roof'. What comes after a correction (of whatever degree) will go a long way in defining future events.

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HUI vs. SPX

2012-01-26T13:21:00.000-05:00

Monthly HUI-SPX ratio chart shows that the 'bullish gold stocks vs. broad market' stance is still a good one. Too bad so many casino patrons insist on feeling good and buying what everyone else is buying instead of thinking about risk vs. reward on an ongoing basis. Even better news is that the smaller miners and explorers are out performing the seniors as represented by the HUI.

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Bear pukage over done?

2012-01-26T12:57:00.000-05:00

The AdvisorShares actively managed short fund sure has been croaked. Where is the short term risk vs. reward, with the over confident bulls or with what is left of the tattered bear camp?

http://www.biiwii.blogspot.com
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SPX & VIX

2012-01-26T12:26:00.001-05:00

Time to start thinking about being either short the market, long volatility or both? Either way, it's just a potential trade mind you.

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NFTRH Email Update (Jan. 19)

2012-01-26T12:15:00.000-05:00

NFTRH

One long, confused sounding (really, just doing the mental work needed to sort things out) email update NFTRH subscribers had to digest one day last week pre US market open.

A lot of this update's questions are well on the way to being answered in the more obscure indicators we review with discipline on an ongoing basis. And no, I am not bullish the US stock market, regardless of what prices do. Much better places for cash in 2012.

In rising toward the equivalent of SPX 1340/1360, the stock market is merely doing what we had projected it to do in the heretofore most favored scenario. Yet the gold stock sector is not doing what I had projected, at least not yet. It has not even made a serious threat to HUI 550, let alone act as a leader. And I am still waiting on the likes of Almaden, Sabina and Keegan to kick in to a would-be 'January Effect' rally.

Meanwhile items positively correlated to the global economy are rising, with the industrial metals (GYX) finally having turned up to a decent degree and even uranium looking interesting. China (FXI), Hong Kong (HSI) and the Emerging Markets (EEM) have broken upward out of the triangle consolidations and the European markets continue to look good. This is all in line with current analysis.

Back in December as the SPX declined to and temporarily through support in the face of end of the world style bear calls (and a string of concerned 'MF Global' type emails I received), it was easy to write about a rally that could potentially be strong enough to get up to target and reset sentiment from over bearish to over bullish. Check.

But I am susceptible to the bull case because a) I am naturally a doer and a builder, not a doom sayer or fear monger, and more importantly b) because an investment theme of NFTRH is and has been the emerging world in ascension vs. the old debt choked world which is descending. In other words, the "global leveling of the playing field" is a future investment theme.

Now, where does that phrase come from? Well, many readers know it comes from my friend Jonathan, whose unique specialty brokerage not only resides on the top floor of a building in Manhattan, but all over the emerging and frontier world in the form of boots on the ground; specifically Jon's boots on the ground. So while this reputable brokerage has to this point put out bearish technical analysis (on US and global markets) by the smart gentleman (I have met him and read him regularly) sitting a few terminals away from Jon, the big fundamental theme remained unchanged. Imagine that, a brokerage firm putting out forthright analysis that for an extended period was CONTRARY to its main investment theme and bread and butter. That's what makes them special and what has given me hope, whereas before I believed a lot of the cartoon commentary about 'Wall Street' being rotten to the core.

Anyway, on point... the analysis is apparently changing (per a report I received yesterday) at Jon's shop with the idea that Brazil currently looks the most bullish, with "bullish implications for resources, energy and of course, EM."

There is my problem. I am susceptible to one of NFTRH's sub themes as I am more portfolio manager and less trader. I do not want to miss a major theme if this is indeed the start of the new up cycle we have been looking for in NFTRH. Now, nothing is going on in the EM's that we have not been charting all along (broken triangles/bottoming patterns) but I have to this point been giving a lot of respect to the 'interim renewed deflation scare and broad market correction' scenario.

The analysis coming out of this brokerage in a way upsets me because it is now stacked with a growing list of things that are forcing me to reevaluate. The primary one being the wildly over bullish state of US dollar sentiment and the corresponding over bearish state of the euro. There is also the election year theme, the potential bottom in the Silver-Gold ratio and various economic numbers (cooked or not) that refuse to support the bears' claims that the world as we know it is about to end.

Back to the gold sector... recall that a theme that crept into NFTRH over the last few weeks is one where the gold stocks would lose their status (in my view at least) as a 'unique' investment. In performing like $#!& over the last few weeks, could they be telling us this very thing? Have we already hit the inflationary upside phase where the gold stocks would have been leaders (when did they lead anything? I must've missed it) prior to the whole asset spectrum kicking into gear for an ultimately bullish 2012 featuring rising costs in precious commodities, resources and markets of productive economies?

Okay, slow down. Again, the broad market is not doing anything we did not expect. Sentiment is swinging to bullish, just as expected. As I was writing a blog post yesterday on the QQQ's target, I riffed along about my general confusion, but also noted in an edit the state of Tim Knight - a cool guy that I think gets too married to a black and white bearish view - who is near throwing in the towel to the triumphant bulls. http://www.biiwii.blogspot.com/2012/01/qqq-on-its-way-to-target.html

But we had all of this bull activity on radar, and indeed it has been the favored short term plan. Maybe the fact that I am confused and writing this update is further confirmation of some very bearish interim things that will visit within the next few weeks. I cannot abandon the analysis just because I have got a case of the bullish yips. But I will be damned if I am going to miss my own themes, which are 'inflationary 2012' and again hat tip to Jon, 'a global leveling of the playing field'.

So at the very least, I think it is time to back off the near exclusionary focus on the gold stock sector by capping NFTRH exposure at current levels. This does not mean I am going to jump whole hog into the 'inflation trade' today, but it does mean I am going to selectively pluck some things from around the emerging and resource world. In fact, dividend payer Enerplus (ERF) was added yesterday as it tanked to long term support (on share diluting financing news).

The perma-bulls may or may not end up getting the last laugh. The perma-bears are sure becoming dispirited, once again apparently snatching defeat from the jaws of victory. But the current analysis was created for a reason, and that reason was to be aware that a strong rally to reset sentiment was likely.

Sentiment is getting reset, including potentially that of your writer. Part of my confusion is that I am not sure whether to get contrary myself or stay in line with me. What I do know is that I am not short or bearish anything at the moment even as I hold a bunch of under performing precious metals stocks. That gives me strength and helps me retain an unbiased view. I believe the gold stocks, per the monthly chart shown here http://www.biiwii.blogspot.com/2012/01/gold-stocks-vs-s-500.html are set up to out perform the broad SPX going forward. Sentiment in the precious metals sucks, as opposed to what it is doing in the broads.

So, the way I read things currently is to hold at least a core of precious metals stocks (incl. silver stocks) selectively pluck a few things out of the resources and emerging world as opportunity presents, but BE READY for the heretofore current analysis - calling for an interim hard correction - to visit within the next month or so. If things look to go that way, I would manage risk by selling hard or by initiating bear hedging or positioning. But if 'inflationary up cycle 2012' is already starting, I will try to understand this as soon as possible, retain positions and scout new macro opportunities. I would look forward to not burning commissions left and right and just set it and forget it (to the degree I ever forget anything, which is not a great degree :-)) for a while.

I hope that by expressing my confusion or mixed feelings it helps other people start an inner dialogue as well. To summarize, the preferred plan of generally SPX to 1340/1360 --> hard correction --> triggering 'inflationary 2012' is on watch for modification to 'inflationary 2012 in process'. The primary reason being the sentiment state of the anti-market, the USD and of course the state of long term US treasury bonds, in which the huddled herds cling to perceived safety from a deflationary depression. In other words, a contrary setup (for the 'inflation trade' and against deflationists) is already in place.

Regards,

Gary

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Attn: NFTRH subscribers...

2012-01-26T11:57:00.001-05:00

Email update just sent out with parameters and a changing outlook on HUI beyond the short term. Also, per subscriber request NFTRH172 will look more closely at the exploration and junior mining sectors, probably by charting several NFTRH holdings along with the GDXJ.

http://www.biiwii.blogspot.com
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German DAX: Breakout or trouble at resistance?

2012-01-26T07:25:00.000-05:00

Well, that is still undetermined. But if it gets above this area and successfully holds, the target is 7000.

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Canadian '.V's' continue their recovery

2012-01-26T07:19:00.001-05:00

Canadian Venture has been rising since the waning days of 'tax loss selling' season in mid December. Is this just a predictable and temporary recovery or an early manifestation of the coming of widespread effects of an 'Inflationary 2012'?

http://www.biiwii.blogspot.com
http://www.biiwii.com

Base Metals updated

2012-01-26T07:13:00.002-05:00

GYX broke through the resistance area, got above the EMA 200 and sets its sights on 430. Will Garth party on to GYX 430, SPX 1340-60, QQQ 62? Looks that way.

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http://www.biiwii.com

Dear deflationists...

2012-01-25T15:43:00.002-05:00

Get on the right side of this while you still have time. You are well schooled, intellectual and even in some cases genius in the dogmatic way you follow your breadcrumbs. You got it all worked out my friend.

You will probably even get a stock market correction - that is your obsession, no? - but you are once again going to spend a year or so being on the wrong side when it doesn't crash, you are short gold and/or silver, short gold miners, short commodities and short broad global stocks wondering yet again why and how it all went wrong.

That is because you are lazy and cannot get over your own ego. Or something like that. Maybe it's just a blind spot. I don't know. You have been warned, just like the silly inflationists were last Spring.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Stop following the bread crumbs!

2012-01-25T14:15:00.001-05:00

I implore you, if you are doing so...

"Inflation has been subdued in recent months, and longer-term inflation expectations have remained stable."

Stop falling for the commonly accepted garbage that passes itself off as economic and financial commentary. The sentence above reflects what the FOMC needed in order to maintain and continue the ongoing inflation regime. A lack of inflation is not the moderated commodity and precious metals prices of recent months, it is simply a resetting of expectations.

I hope that anyone short the precious metals sector in service to deflation has just gotten their ass shredded for their own naivete, greed and stupidity.

Other than that I have no real strong opinions on the matter. :-))))))

http://www.biiwii.blogspot.com
http://www.biiwii.com

Ag gravating markets? No, it is just the preparation for the coming of 'Inflationary 2012'

2012-01-25T08:45:00.002-05:00

You play in the modern stock markets? The super dynamic markets we have enjoyed since Alan Greenspan began his most intense phase of trying to control outcomes; trying to manage markets in a Zen-like 'wax on, wax off' manner through monetary policy? Poor Ben Bernanke inherited a race car that is perpetually trying to spin out on hair pin turns. Just look at the upward and downward spikes in the formerly calm TYX-IRX yield curve.

A down spike like the one we are currently on represents a time when a deflationary backdrop is in force as the curve would have us believe that monetary policy is not particularly accommodating. I believe what is actually happening however, is that expectations are simply getting back in line from last spring's inflationary hysterics (see the April spike below).

As for asset markets, look at the ride the silver bugs have been on. Just last spring silver blew off to 50 amid the inflationary hysteria noted in the previous post. Things were so bullish and the public so convinced of an inflation problem that emotions were running very high in those directions. As NFTRH noted last summer in the wake of the silver blow off and during the $300 rise in gold that resulted from the European debt panic, this was all unhealthy activity that longer term precious metals bulls needed to protect themselves against (through risk management).

The current near term state of Ag is unclear by my read. We had a downside target of 'just under 30', which was close to a no brainer after the mania blew out. The next targets were 'low to mid 20's' (check) and 20, which is long term support, not fully illustrated by this daily chart. It is still open, but...

If you take in the theme of the previous post, you may come away with a question that asks 'is inflationary 2012 coming now or after a decline to the bottom line of the huge macro channel (on the 'continuum') and one more deflationary dunk?' With silver you could ask 'has it turned up for real now or will it take one more severe decline to the massive support that resides at around 20?'

The same can be asked of many other asset markets and commodities.

You know I am not often a raving bull about silver, but the chart above is very bullish. It just depends on which support target the bullishness is projected from. Sentiment in the precious metals flat out stinks and that is of course, a bullish indicator.

The Wizard meets with his henchmen and women today and I am sure there will be some sort of expectations management in their statement. Given how (predictably) strong the broad market has been of late, I would not be so sure what comes out of the macro manipulators' PR is going to sound overly dovish. In light of a potential bottom in long term T bond yields, I wonder how today's FOMC PR is going to play? Will it enable, contradict or disable the current theme?

There are a lot of moving parts in motion right now. You have got to love the markets. Do you love the markets?

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http://www.biiwii.com

2012 Likely to Be Very Different From 2011

2012-01-24T14:03:00.002-05:00

Regardless of what happens in the short-term (i.e. interim market correction of routine or severe degree upon completion of this sentiment-induced broad market rally), the analysis being brought forward in NFTRH over the last few weeks is painting a picture of a 2012 that could by year end, feature heightened inflation concerns as opposed to the deflationary ones that so predictably came about after the spring of 2011.

The 'continuum' (AKA the monthly view of the TYX or 30 year Treasury yield) predicted last spring that Bill Gross of PIMCO stood to be very wrong in his highly publicized Treasury bond short play. Another way to put it is that PIMCO was heavily 'long' rising interest rates at a technical point that had limited every rise in long-term rates over a span of decades. Was he going to suddenly make THE call and be right on this? Unlikely.

Enter one US congressional debt debate and one European sovereign debt meltdown and the US Treasury market was suddenly all the rage, as long-term interest rates plummeted. Enter the 'deflationists' that always come center stage at such times.

Whereas Mr. Gross was taking a big risk in being short the bond (long rising rates) near the 100 month exponential moving average (solid red line), the people buying the deflation story hook line and sinker, clinging to the US government's most long-term debt paper for safety, are now sitting squarely in the line of fire with respect to upside inflation risks as the TYX decides whether it is going to insert another green arrow at current levels.

Here is a closer look at the TYX in the form of a weekly view.

Let's just say that this looks like a bottom in the making for 30 year yields. Dialing in closer, the daily view below shows a move above resistance. While it is too soon to confirm this as a breakout, we can certainly see some risks to the 'declining interest rates' and deflation scenarios going forward.

Now, it is not as easy as just watching nominal interest rates and calling 'inflation' or 'deflation'. There are other indicators to use to look at this from as many angles as possible, including the various yield curves between long and short term Treasury rates. NFTRH171 took a look at the most extreme curve, the TYX-IRX (30 year yield to T bill 'yield'), for example. Its message was one of deflationary wrangling amid upward and downward spikes and massive volatility in 2011, while remaining in an upward trend over the long term.

This is a picture of accommodative policy making, the likes of which tends to bring on obvious inflation problems in the form of rising asset prices later on.

Then of course there is the hugely bullish sentiment toward the currency that denominates US Treasury bonds. Here is the latest view of the Rydex Strengthening Dollar Assets (compliments of sentimentrader.com), which is of course, bearish on a contrarian basis. 2011's refugees, many of whom were likely too long the 'inflation trade' last spring as inflationary fears maxed out are sitting comfortably in US dollars, convinced of coming declines in asset markets.

We have been fed so steadily a diet of the European debt crisis, the MF Global margin meltdown and unhealthy systems coming apart at the seams left and right. I do not want to minimize these threats, but if things go the way they have gone all along the 'continuum' at points when the majority were convinced of certain outcomes and eventualities, a set up is in place for something very different.

That would be the "Inflationary 2012" theme NFTRH is working on week by week. Risk has been managed rigidly throughout a challenging 2011 to the present time, and this year we look forward to the possibility of something very different, judging by this view of the US Treasury market, US currency and several indicators that are generally updated in NFTRH on an ongoing basis.

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Silver breaks above 1st resistance (& target)

2012-01-24T08:14:00.002-05:00

Meanwhile, Ag has had targets of 31 (resistance) and 34 (resistance & measurement off of bottoming pattern) open. Target 1? Check. Target 2 is still open. Important short term support is at the EMA 50 AKA yup, 31.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Gold to the resistance zone...

2012-01-24T07:38:00.004-05:00

NFTRH has had the recovery target of 1650-1700 (or the 'nose' of the Triangle) loaded since our 1590 downside target was pierced and support in the low 1500's was registered. So gold is a candidate to terminate its bullish activity right now.

But resistance is there to be broken, and the picture is not so cut and dry. A correction of very minor or more serious degree was bound to happen right here. What comes next is less obvious. There are a lot of hints flying around outside the gold market, and I am trying to gather them, find meaning in them and correlate them. Short of that, it helps not to force anything. We cannot bend markets to our will.

http://www.biiwii.blogspot.com
http://www.biiwii.com

NatGas moves 10%

2012-01-24T07:20:00.000-05:00

Apparently somebody somewhere is still using the stuff. :-)

Natty is not bullish until it gets above 3 and holds. That would imply a trend change.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Just another not so manic Monday?

2012-01-23T13:46:00.000-05:00

Is today going to be any different than the previous string of pauses to refresh for our bloated piggy? I think I will let it breathe and see if we can't make a new move toward target before thinking about getting active against this thing.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Nearing time to buy volatility?

2012-01-23T09:35:00.002-05:00

Eh Beuller? The herd sure is getting brave lately. Bottom of SPX target range (1340-1360) is only 25 points higher. I would like to remain patient but...

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Pan American Silver to buy Minefinders...

2012-01-23T08:57:00.000-05:00

I bought back MFN on the tankage below 10, but traded out too soon in favor of a miner I felt was a better company for my needs. So my okay profit did not turn out to be a great profit. Dat's show biz.

Meanwhile, Otto over at IKN will be quite happy because he identified MFN's value (confirmed by PAAS) in his newsletter and not only held on, but averaged down. This is what people do when they see value in contradiction to price activity. In fact, NFTRH171 went on about this concept this week in a more macro sense. VALUE, people... value.

Anyway, this is one of those acquisitions that reflects well on the entire precious metals sector. I am sure when the next bull cycle comes, the garbage will rise too. But over the long term, you can't go wrong buying up value when you see it. Especially when value is at odds with the prices the markets have assigned to a specific stock or sector.

Pan American to Acquire Minefinders...

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NFTRH171 Out Now

2012-01-22T10:42:00.001-05:00

171 has got its contrarian thinking cap on as more signs are uncovered that 2012 is not going to go the way that the trend followers and robotic thinkers believe. The majority of bulls and bears, inflationists and deflationists, are robots you know.

NFTRH171 out now.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Party on Garth (Gold-Silver Ratio)

2012-01-20T15:34:00.000-05:00

In reference to the previous post, here is what this rise in silver has done to the GSR. 'Party the $%*! on Garth' is the would-be message.

Have you looked at the poor senior gold miners? GSR rises, they go down. GSR goes down, they go down. This is what you signed up for when you got your gold bug membership card. The world hates you, and everybody makes coin except you. All the gold bug pumpers are charlatans and stocks and bonds are where it is at.

Yes, I am joking. Something has got to give, because we are not going to proceed with an everything bullish but gold stocks environment.

http://www.biiwii.blogspot.com
http://www.biiwii.com

Silver proxy SLV

2012-01-20T15:21:00.002-05:00

The 50 day moving average (shaded area) has been pretty important as a resistance and support zone for silver. Today SLV is boinking up above it on a frisky looking move. That has been expected as NFTRH targets have been 31 and potentially 34 for Ag. What comes next? Lots of things in motion. Everywhere.

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AAU 60 min. chart

2012-01-20T10:22:00.000-05:00

Time to find out whether Fibonacci's reality is anywhere near its hype as a useful TA indicator. I have shown some gold stock winners. Here is one - no less favored by me - that has been struggling for months now. You would think a low volume decline to the 62% Fib within a Falling Wedge might be bullish. You would think... Actually, I am not thinking too much. Just holding.

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