Slope of Hope Blog Posts
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Now, I have not gone raving silver bug on you. The title says “silver bull” because that is what silver is in, a bull market by definition of having taken out the 2016 high of 21.23. We targeted that point as a cyclical bull market gateway, silver cut through it like a knife through warm butter… and there you have it. A key higher high. I don’t apologize for any of the above. It is fact.
So let’s catch up on Gold’s wild little bro as it hangs tough below the NFTRH ultimate cyclical bull target, which has been the 24-26 long-term resistance zone (per the 3rd chart below). Silver made a violent hit and recoiled, but…
The Opening Notes segment of this week’s Notes From the Rabbit Hole, NFTRH 614…
Keep Dancing (while the music plays)
FOMC came, FOMC delivered what we knew they would, FOMC left and the machines drove the markets down and up for a couple days, leaving the situation largely as it had been. NDX near its highs, SPX holding the support of its EMA 20 and DJIA thus far successfully testing its moving average convergence (SMA 50 & 200).
As a bonus, Tech leadership (NDX/SPX) remained fully intact and the Semi sector may actually be firming again vs. Tech (SOX/NDX). In other words, it was another week of worry and angst outside of the markets (as the virus rages and the economy tanks) but stock prices only care about what monetary and fiscal authorities are doing to the money, the real funny munny.
Our hard working miner here (we’ll call him Huey) has been pushing his cart of rocks, first gently downhill from 2016 to 2018 and then uphill to a bull market since May 2019.
As tracked in NFTRH, in 2019 the macro backdrop became positive for the gold stock sector as gold entered a bull market by taking out the 1378 level and its ratios to stock markets began to rise. Gold/SPX is among the most important macro indicators to a bullish gold mining case as a gold price rising in terms of stocks is the key factor in drawing larger investment (e.g. institutions) to the sector.
We’ve been micro-managing silver lately in NFTRH and NFTRH+ updates and that is for a reason. The reason is that gold’s wild little bro has been rallying – in what is turning out to be 5 clear waves – since the March crash.
When that crash reversed, my view, and hence the NFTRH view was that it was likely to have been a horrifying shakeout of the silver bulls that due to its violence may well have sparked a bull market of some kind on the flush. We noted in real time that silver and precious metals mining stocks often make dramatic crash lows immediately preceding significant new rallies or bull markets. Silver was in an uptrend before the crash and that was a significant factor to a bullish view, post-crash.
Here is the daily chart we used in yesterday’s subscriber update showing that silver was taking out a resistance point we’ve noted was not formidable (boy, it sure wasn’t).
The Continuum (monthly 30yr yield with the 100 month EMA ‘limiter’) simply states that the economy was weakening, as were inflation expectations, before 2020. In early 2020 we got a real deflationary jolt from which asset markets are still clawing back, with full frontal inflationary support from a Federal Reserve desperate to keep asset owners whole (and further enriched) and to further punish savers and those without the means to invest in the racket.
They called Ben Bernanke “the Hero” but he was actually the perpetrator of the next debt-backed inflation that would further ruin the country, primarily by greatly increasing the divide between asset owners and everyone else. If we had taken the pain in 2008 and 2009 we’d be on a new system now. Instead, we are riding the Greenspan>Bernanke>Powell continuum. Yellen is omitted because nothing egregious happened under her watch. She slipped in between the cycles and fell through the cracks.