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The gold-silver ratio is declining with the broad asset market party as silver explodes higher, leading the speculative impulse.
We are managing the now confirmed bottom in the HUI, we are managing its upside targets (hint, we're just about at the first
one) and we are managing the probabilities with respect to the
breakouts in gold and silver… all in the newsletter week to week and
more dynamically, in email updates such as the one that went out this
For our general purposes here however, let's just note that the entire
endorphin release in the broad markets has come against a situation
where the noise level about QE has gone way over the top with the euro
leaders squabbling and jawboning and US Fed members alternately playing
good cop and bad cop to a market that doesn't really know what to think,
other than 'let's party!'.
I would imagine that there are a lot of people feeling like "shit, I
missed the bottom… I better get in!" and indeed, the AAII individual
investors are at a 4 month high in bullish sentiment: See 5th item
down, here http://www.biiwii.com/analysis.htm.
T bonds are UP, while Uncle Buck is down in the face of the euro, which
is UP and probably getting short-covered. The precious metals are doing
something really constructive here, but what I will say is keep the whole
in mind, not just one or two particular areas of interest. It's a
circus, a carnival and a casino all rolled into one and perceptions are
now being built and cemented in a mirror opposite to those that got
burnished into the investor mindset in the spring and early summer.
Data released after hours on Wednesday shows that the slowdown
in China continues, as shown on the graph below.
As I mentioned in my post of August 15th, China's Shanghai Index is struggling
to stabilize at three-year lows. Without a sizeable pickup in demand for its
products, any temporary stimulus measures that its Central Bank may employ may
not have much effect. This is a major player in the global economic slowdown
that is currently unfolding, and is one to watch over the coming weeks.
Long-time readers of the blog know that I have shared some of my deepest thoughts and closely held dreams. As you know, before I became a blogger and market watcher I wished to live the care-free life of an 80's hair band lead guitarist. Shredding on my flying V, wearing leather pants and studded arm bracelets, and causing my loyal fans to head bang in rhythm could certainly be listed as my greatest desires in life. This week's market news reminded me of those memories of long ago and I recalled the song of a band I didn't like that much. These guys weren't hardcore like me, but they were obviously big time and therefore were able to define the 80's heavy metal movement. Speaking of heavy metal, what is up with silver?
Data released today (Thursday) shows that consumers in
the Eurozone are growing ever-more uncomfortable, as shown on the graph
Since Consumer Confidence is a "leading indicator of consumer
spending, which accounts for a majority of overall economic activity," and they
are approaching the 2009 lows, this does not match the buoyant signals that the
European markets have been sending/portraying. As they are major importers of
Chinese products, this will, no doubt, continue to impact China's slowing
economy, as mentioned in my last post.
We printed a doji yesterday with a lower high and lower low. We did see a bounce off the R1 1405 area I mentioned yesterday.
My guess is today the Bulls will try to run it back up to the top of the channel early. My inclination is to short that as I don't think they have the firepower to break through R2 at 1431. I also see MACD rolling over as well as declining RSI