Thursday, January 23, 2014

High Volume High- Jan 22 Trading Day Edition

Surprisingly, the number of names making new highs, on volume, does not match the the total price/volume characteristics we saw in the latest price/volume heat map. I am not sure if this means anything but it does stick out as odd. Looking at the names here, TXT stands out to me as having some interest. The entire/,ost of the aerospace/defense complex caught a bid in yesterday's trading, which could account for traders piling into TXT. I say this as the company released earning yesterday that were more-or-less inline with the Street's guess with guidance for 2014 that was short of estimates. Investors must have seen something there below the numbers, as the shares of TXT blew through the trading resistance that had been set up. This is one to watch in my mind.

Volume Off the High- Jan 22 Trading Day Edition

Just one name here for yesterday's trading. BBSI came off its recent high after reporting lackluster earnings.

Gold Seek Radio's Interview of John Williams

Has the Fed's Tapering Ended Five-Year Bull Market?

Rich Dad/Poor Dad- Gold and Silver Real Money

Gold Trapped In Heavy Market- Kitco's Hugg

I side with Hugg here. The market just feels like, to use his terms in the below video, heavy. Although the junior miners have caught a bid, we have seen no confirmation in the major gold miners. This is while the rally in the yellow metal has occurred on little volume support. However, I find the idea that the US dollar will be higher to a strengthening economy as bunk.

Calm Before the Storm- S&P 500 Price/Volume Heat Map Jan 22

With the benefit of hindsight, it appears that yesterday's trading was the proverbial calm before the storm. Through about mid-day, the S&P 500 is off about 90 basis points versus the less than 10 basis point gain. With just the modest increase in the market, most the sector groups performed benignly. That is outside of the materials group.

Looking at the price/volume heat map from yesterday's trading, demand and supply remained subdued overall. That said, many of the larger names in the materials (like Dupont, Monsanto, Freeport Mac for example) all fell on volume, leading to an increased supply reading for the group. Yesterday's trading seemed tilted against all materials, supposedly on negative sentiment towards the Chinese economy. Strangely enough though, the energy complex gained on higher demand levels, probably helped by the cold weather seen across the U.S.

Wednesday, January 22, 2014

Gold Price Moves Important This Week

So says Jim Wyckoff at Kitco news.

I am still surprised of the unconfirmed strength in the GDXJ. Does this suggest further upsize in the price of gold and major miners. I am not so sure. First, the major miners have rallied since the end of the year. However, the volume levels remain muted. Ditto for the gold ETF's. Although I have shown how the gold miners tend to lead the price of the yellow metal and the price rise in the GDXJ may suggest a rebound, I would want confirmation from the majors before saying we are seeing strength.

High Volume High- Jan. 21 Trading Day Edition

A lot of names to peruse here from yesterday's trading. One name that sticks out to me that looks to be catching a bid after a long consolidation is AA. A number of items appear to benefiting the stock including the announcement of further cost cutting efforts and an upgrade by JP Morgan. Additionally, many financials seems to be moving to their highs, which is noteworthy considering that the sector as whole underperformed the market and demand was rather weak in yesterday's trading.

Volume Off the High- Jan. 21 Trading Day Edition

At some point when I get a little time, I will/may fill in the gaps between the last price/volume mover report and today's. Until then I will stick with the present. A few key notable downside movers in yesterday's trading, despite an up market, includes ATI and SID. ATI reported earnings that beat the Street's guess, but I suppose that investors were focused on the revenue line for specialty metal producer. ATI was also likely hit by the negative sentiment across the metals group. For instance, SDI came off the highs after iron ore prices came off following weak data out of China.

Bernanke and the Fed- A Speech By Jim Rickards

And Its Back- S&P 500 Price/Volume Heat Map Jan 21

After a brief hiatus, the price/volume heat map for the S&P 500 heat map is back. Again, I took I took some time off to recharge, go on vacation, spend time with family, do a half marathon, etc. It was an enjoyable time. Now however, it is time to get back to work. I may (probably at some point) update you for the heat maps I missed over the break, but for the time being I have to get back to business and look at the present and future.

With all that said, the market gained a bit in yesterday's trading, as volume levels were rather benign. In all, the S&P 500 looks to be in a continuation pattern to the upside, a trend I expect to continue as long as we continue to break new highs and absent any significant sign of weakness. That said, any long-term reader will know that I remain bearish overall and think that the market remains poised for a significant setback.

The following is the latest performance results for the S&P 500 and subsequent sector performance.

Turning to the heat map, overall demand was generally weak sans gains in the utilities sector. Utility shares gained as treasuries extended their recent downturn. Both the trend in utilities and treasuries appear to be stuck in a trading range. Utilities specifically look weaker in the current uptrend that began at the beginning of the year. Without any breakout above the $39.20 price level on the XLU (Utility spider ETF), the sector group will likely stay in a range. More so, many on street are playing a contrarian trade of being bullish treasuries. For instance, here.

Tuesday, January 21, 2014

A Very Telling Week For Gold: Kitco's Wagner

One item of interest outside of Wagner's analysis, the strength in the junior miners. Although both the GLD and the GDX have rallied on more benign volume levels, the the junior gold miner index has rallied strong on accelerated volume levels. I am worried that we are not seeing follow through with the other investments in the gold complex, but this price/volume performance gap is something to watch.

Gold Headed Higher, Big Surprise From China Coming

A Kitco interview of John Doody

Central Banks Can't Keep the Game Going Forever

Can't say I have ever heard Danielle Park before this Cambridge House interview, but she say's a lot of good stuff here. I may put her on my radar.

The US Living A (Keynesian) Lie - Morgan

An interview with David Morgan by the Cambridge House

The Collapse of The US Dollar- Maloney

An interview of Mike Maloney by the Cambridge House

An Imaginary Recovery- Schiff

QE Providing Stimulus to Bubbles While Stifling Real Growth - Schiff

Well one thing is for sure, gold has been performing far better since the supposed beginning of the end of the Fed's taper.

The Historical Gold Standard

From Robert Murphy and the Mises Institute

Gold Miners Set To Beat Expectations- Kitco

We shall see if expectations were reduced enough.

Gold Bottoms in The First Quarter- Kitco's Wagner

That would be nice to see. I think the trading in gold looks more positive for the bulls, but I seen that before and absent a sign of true strength I remain cautious.

Lessons Learned in the Decade- GMO

Just getting back after some time off to go vacation, spend some time with family, run a half-marathon, etc. I hope to have some interesting posts and some new materials in the coming weeks and months. With that, I found the below 'lessons learned" from Grantham and company at GMO rather telling while providing some great food for thought. I also provided my comments in the parentheses.

Lessons Learned From GMO
  1. The Fed wields even more financial influence than we thought. (This should be plainly obvious but.....)
  2. Low rates have a more powerful effect on driving financial assets than on driving the economy. (Massive swings in assets prices despite little to no change in the economy makes this an obvious statement. However, I wonder if asset price volatility will eventually bleed into the economy, as price discovery remains one the most influential aspects on long-term economic viability and integrity.)
  3. The Fed is capable of being extremely out of touch with the real world – "what housing bubble?" – plus more doctrinaire – "no, the low rates had no effect on housing" – than anyone could have imagined. (Then why do we continue to listen to them? Maybe point one?)
  4. Congress is nearly dysfunctional, primarily controlled by large corporations, and hamstrung by the supermajority now routinely required in the Senate. (Nearly?)
  5. Government administrations can be incompetent for long periods. (When you look at history, most of the 'established' administrative offices never existed.)
  6. Poor leadership can really damage a country’s hard- won reputation in a mere 10 years. (probably less)
  7. Obama is not a miracle worker! (see point six)
  8. The two time-tested investment tools, value (P/E ratios and P/B ratios) and price momentum, are now much more heavily used and not so reliable as they once were, say from 1977 to 1997. (This, in my opinion, reflects GMO's 7-year asset price forecast, which I have not presented but I believe can be found on the company's website.)
  9. Asset classes really are more inefficiently priced than individual stocks on average, and therefore offer greater opportunities for adding value and reducing risk. (I always thought that broader indexes and combination of assets tend to reduce inefficiencies, and not enhance them. Maybe GMO has more insight into this thought?)
  10. Developed countries, including the U.S., are past their prime compared with developing countries: it is indeed a new world order. (Just look at debt levels relative to GDP or infrastructure spending needs. What does this say about the proverbial currency war and the value of the US dollar?)
  11. Education and training are the keys to increasing wealth on a sustainable basis and the U.S. is in danger of losing its once large edge here. (I would like to see some stats around this. However, the minimum wage debate highlights this idea in my mind.)
  12. We all live on an island, which can be overexploited and turned into a barren Easter Island if we are not careful. Resources are finite and biodiversity is fragile, and both must be protected. Carbon emissions are the single greatest threat. (In my opinion, yes and no. We do live in a bubble of sorts and natural resources are finite. However and although I am a proponent of the many peak energy theories, I also think human ingenuity and innovation remains disregarded in this statement. More so, I do not buy the hype that carbon emissions will lead us to out doom.)
  13. Being a global policeman is expensive, and somewhere between difficult and impossible. (Hasn't Iraq and Afghanistan proven this in recent years? What about Vietnam? One should throw no punches unless threatened.)
  14. The Fed learns no lessons! (And yet, we still listen to them.)