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Look, we are all wrong sometimes. That is because the markets are this way one day, that way the next and then something else the day after that. That is why we need bigger picture plans.
I for instance, have been guarded on the gold sector and technically at least, still need to see some upside parameters taken out. But today’s market information brings a potential fundamental underpinning as the stock market flirts with some important parameters of its own.
The S&P 500’s ‘Trump Trade’ is still intact per a chart guy actually worth listening to, Rich Ross, who I met 7 years ago when he worked at the firm (Auerbach-Grayson) run by my late friend, Jonathan Auerbach. Nice guy with nice, clear charts and no need to over complicate things.
Here he shows SPY above its SMA 50, which folks, is one of the reasons why I covered my own short positions. The other reasons were that the SOX was still on its short-term moving averages and Goldman and the Financials were smashing into lateral support and getting oversold.
This one chart shows why ‘the Trump trade’ is still intact (video link) (more…)
I’ve been watching the herds to try to determine just when the interest rate topic among the best and brightest (as chosen by the media) would start to pivot from ‘rising rates!’ hysterics that have been locked and loaded in the public psyche since the US election to a sort of ‘rut roh, maybe we got played again… ‘ realization that Rome – and a Great America – are not built in a day.
What I am trying to say is that after the previous media headlines last summer (mainstream media: NIRP & BREXIT!!… everybody into risk ‘off’ bonds!) yields reacted a bit and rose as they should have, from a contrary setup, in order to catch the herds off sides.
But then the hysteria over the Trump election led to the Druck’n Suck-In of the true believers (or “Sons of Druckenmiller”) and… here we are with everybody anti-bonds, pro-reflation and pro-interest rates. Maybe they would be right this time, but then again, given the herd’s history (from Sentimentrader w/ my markups)…
Every time SMH does this, it quickly pulls back. At least that has been the case each time it has popped upward from an already overbought situation over the last 8 months. Now, I am short the Semis (in a complete 180° from 10 months ago) and long the boring stuff, so I am talking my book.
But I am also talking this chart, and if the Semis prove that it is different this time I’ll have to cover in ignominy. But it cannot be argued that these types of moves – sucking in the last of the momos – have routinely preceded mini and not so mini pullbacks throughout the rally.*
* An aged rally, at that. It was appropriate to get bullish when we did. In my opinion it is inappropriate now… very inappropriate. But we’ll see what the market decides. If it is going to blow off, the Semis could lead. So there is obviously risk being short as well.
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Those who don’t like my writing style may already call me boring (or worse), but as far as stock holdings go I willingly take on that description. If you’re looking for words about yesterday’s FOMC meeting, you won’t find them here. There are plenty of people picking that thing apart and trying to make chicken salad (news) out of chicken shit (a non-event).
I am not going to go on about the precious metals’ big rip yesterday because that is for casino patrons to get excited about. I’ve expected the sector to bounce from oversold conditions. When it takes out real upside parameters (that NFTRH will surely manage) we’ll amp up the hysterics (not really).
The stock market? It’s scenarios are Thing 1 and Thing 2. The 1st Thing is to resume upward now and bring on the climactic suck in sooner rather than later. The 2nd Thing is the healthier one, where the market corrects now and makes new highs and sucks ’em in later. I’ve favored Thing 2, but now it is time to watch short-term events and do what the market says. Okay, before I get off track, on to the boring stuff…
