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Si1! (Silver Futures)

Unapologetically BearishA series of events took place causing me sit back and contemplate market participants (in)sanity. First, it is known that I've was one of the first to stick my neck out and tell it how it is – the U.S. Is facing a recession in 2016 – last April. Soon after, various investment banks flirted with the potential but gave the very realistic situation very low probability of happening. Needless to say, critics (unfortunately those that “manage” money) have come out to chastise the recession call, which is not backed up hard data but backed subjectively by a rally in equity prices. They repeat the mantra “don't fight the Fed.” Unfortunately, we've already witnessed the carnage bred from the same ignorant complacency as equity markets halve themselves twice in less than 15 years. Secondarily, last Friday, I watched Mark Zandi, Moody's chief economist, in conjunction with CNBC reporter Steve Liesman, say that the data depicting the sad state of economic affairs was wrong and that we should simply follow the non-farm payroll numbers. Whoa! This is a classic case of narrative over fact. But, lets look at key economic data points that have already hit cycle highs and rolled over: Key Data Point Post-Great Recession Peak, YoY % Non-Farm Payrolls First Quarter, 2015 ISM Non-Manufacturing PMI Third Quarter, 2015 Real Consumption First Quarter, 2015 Agg. Private Sector Wages & Income Fourth Quarter, 2014 Retail Sales and Food Servicess Third Quarter, 2011 Business Sales Second Quarter, 2010 Business Inventory-to-Sales Ratio First Quarter, 2016 (Cycle High) ISM Manufacturing PMI Fourth Quarter, 2009 Additionally, all is not well in the corporate sector. Last month, market participants saw corporate profits drop 8.4%, nearly 3x more than expected and the third quarter in a row. Furthermore, profits for all of 2015 fell 5.1 percent - the largest drop since 2008. This is much higher then the .6 percent decline the year before. Mainstream economists don't forecast a looming recession, but when have they ever? Every recession since the early 1980's began with growth above one percent. In 2007, growth expansion was at 1.87 percent, only .13 percent lower than it was in 2015. When one steps back from market nuances and models for potential of all risks, not only does the picture become more clearer but the ability to adjust when needed becomes more simpler. In " SPX Pullbacks Are Volumeless, Stay the Course ," I pointed out the lackluster conviction of the equity rally. This still remains the case. Those that "don't fight the Fed" will be sorely disappointed when the only volume swarms in on the elevator drop. Notice that price action and accumulation on SPY hit a wall and appears to be pealing back: In April 2015, I issued a 2016 recession call between Q2-Q3 for the U.S. (following my January call for 1,810 on the SPX). After being laughed at, I wonder who will have the last laugh as Atlanta Fed's GDPNow is modeling a mere .4% (with a potential to go negative) for Q1. At 22.87x trailing 12-months earnings, equities remains extremely expensive and only have been at these levels prior to market crashes, including the market panic of 1893/96, flash crash of 1962, early 1990's recession, the Dot Com bubble and the Great Recession. Do you feel lucky? .... I remain unapologetically bearish. Reiterating my 1,546 SPX target for 2017. Please feel free to comment and share charts! And follow me @Lemieux_26 Check my posts out at: bullion.directory www.investing.com www.teachingcurrencytr
SP:SPX
by CommoditiesTrader
8
Gold Trends Near Resistance After Consecutive Session GainsCurrently, gold is budding up against intraday resistance, following two consecutive sessions of gains on a weaker dollar. As the rate hike came and went, many – even those who ushered in the hike with excitement – are beginning to wonder if the Federal Reserve waited far too long to boost interest rates. The yellow metal had began its two-day rally by finding bidders on the weekly support level of $1,046. Even though gold has seen nice gains following the FOMC, the paradigm has been to sell rallies despite whether or not it fundamentally makes sense. According to the Commitment of Traders data, large speculators are the most short gold ever. This could cause for a disastrous 2016 for hedge funds if fundamentals for owning gold improve, as we have already seen what happen when crowded trades unravel in the euro. On the four-hour chart, gold is hovering just under $1,080 and the 200-4H EMA, which will act as dynamic resistance until a confirmed breakout occurs. Price action is trading at the upper-end of a symmetrical triangle, while a minor descending support within the pattern is found (dotted line). Within the pattern, support is found at $1,074 and $1,066, while a confirmed breakout could signal a move higher to $1,088 and $1,095, potentially $1,111, per ounce. If gold prices do see selling pressure and close beneath trend support, weekly support levels will remain key. $1,000 and $955 are technical targets. Please feel free to comment and share charts! And follow me @Lemieux_26 Check my posts out at: bullion.directory www.investing.com www.teachingcurrencytrading.com oilpro.com
FX:XAUUSD
by CommoditiesTrader
5
Precious Metals Jump Ahead of FOMCPrecious metals jump higher ahead of today’s FOMC minutes and potentially the first rate hike in the U.S. since 2007. Why? It’s most likely contributed to the fact that the majority of market participants believe Fed Chair Janet Yellen will remain extremely dovish post-rate increase. A dovish hike may be a hard sell , as Nomura suggests, but precious metals may have already priced in a specific rate trajectory. The U.S. dollar carry trade is the most crowded trade and by significant margins, according to Bank of America Merrill Lynch Survey of Global Fund Managers. If Yellen choreographs a dovish hike, the dollar trade could begin to unwind causing relief in battered commodities; and gold and silver will benefit. Gold has been trading in a range, and price action is forming a small, symmetrical triangle on the daily chart. The results of the FOMC, and surrounding rhetoric, will pave the way for the yellow metal. If there is a more hawkish tone, gold could trade lower to $1,035, while a more dovish tone may send gold to restest resistance at $1,194/97. Silver is a little tricky because it is more tied in with economic growth than monetary policy. The beaten down commodity will see relief if the dollar bulls take some off the table, but poor economic data may still be a hindered to silver. If inflation were to pick up, consider that bullish for silver. If commodities can get a boost, expect silver to trade higher to $14.52 with the potential of $15.30 (highly dependent on the outcome of the dollar). Conversely, selling pressure could cause silver to test significant support levels at $13.12. Please follow me @Lemieux_26 Check my posts out at: bullion.directory www.investing.com www.teachingcurrencytrading.com oilpro.com
COMEX:GC1!
by CommoditiesTrader
1
Gold Remains Vulnerable $1,000 per ounce is near - an existential victory for Wall Street Historically, gold has been a go-to for times of financial uncertainty, whether deflationary or inflationary. Unfortunately, with the perception that central banks around the world will stimulate until growth shows up (hasn't so far) and a global slowdown won't turn into a global recession, gold will bare the brunt of hostility. Gold has closed lower the last 14 of 15 days, and the yellow metal is currently trading lower ahead of today's FOMC minutes. Traders will parse through rhetoric and formulate their own interpretation on whether the Fed will hike interest rates into a stronger dollar. As expected (no, really!), gold is trading a hair above $1,066 - a target posted in "Gold Lower as Traders Eye ECB Minutes." Gold is so vulnerable to market perception that the common trope of gold to $1,000 is strikingly more likely, even as U.S. data continues to flash signs of a significant economic downturn. If gold trends to a minor support target of $1,041, the weekly support of $1,035 is clearly the only thing between now and $1,000 per ounce. The dollar index has increased 23 percent since 2014, which still remains slightly lower than the 13-year high made earler this year. If the Fed exacerbates the strong dollar by hiking, the effects to the economy will be more pronounce. To note, Fed Vice Chair Stanley Fischer said during his speech last week that the effects of the strong dollar are lagging. For instance, a prolonged 10 percent appreciate in the dollar would take a large toll on real exports. And that has already taken shape. "Real exports fall about three percent after a year and more than seven percent after three years. The gradual response of exports reflects that it takes some time for households and firms in foreign countries to substitute away from the now more expensive U.S.-made goods," said Fischer. You don't say? He continues to outline how bad a strong dollar really is, "the staff's model indicates that the direct effect on GDP through net exports is large, with GDP falling over 1 to 1.5 percent below baseline after three years." So, in essence, Wall Street may get to rejoice soon enough on their crusade to $1,000 or below, but does that really matter when the economy is eroding and the strong dollar adds insult to injury?
COMEX:GC1!
by CommoditiesTrader
3
The Missing Key for Silver is InflationShould silver price in retail demand or economic sentiment? Silver prices have rallied hard since the beginning of October, up almost 10.5 percent since the October 2 low. However, traders are now budded up against key technical resistance. Will traders’ sentiment reject silver’s upward momentum, as it has done seven times since 2013, or will demand spark higher gains? Silver has had a rough go since crashing from its 2011-highs. Currently, silver is trading around the 200-day EMA, which has proven fickle for silver prices. Every time prices have been able to rally to the key pivot-point, prices have been immediately rejected or the trend’s momentum quickly faded. Despite mints beginning to ration silver bullion coins (again), prices are continuing to show the divide between sentiment and demand. As I have mentioned in several articles previous, silver’s demand is largely based upon economical factors, such as manufacturing and industrial output whereas gold prices are almost entirely derived from investment demand in relation of central bank policy. Some analysts expect silver prices to rally because demand for minted coins has risen, and mints are having a tough time filling orders. But, if history is any indicator, this does not happen. For instance, in July, the U.S. Mint reported that demand for American silver eagles were so high that it depleted their stores and began to ration the bullion coins. Needless to say, silver went on to drop an additional $2 per ounce while breaking $14 per ounce back in August. It may not be all it is cracked up to be. The shortage of minted coins only represents one, small facet of silver demand. According to Smaulgld.com, when the first shortage was reported, the shortage was found in the retail market but not the wholesale market. Silver has long been a trusted go-to for retail investors. It is a tangible asset that tends to be priced reasonably for the everyday investor. The multi-year lows carved out this year has only been seen as a buying opportunity. Although, it is important to understand that silver is not an investment for tough economic times because that is, generally, how market participants price silver. Silver is only a form of protection against inflation, which undoubtedly will show up. Investors will just have to be incredibly patient. (Silver outperformed during recessions that were coupled with higher inflation as seen during the 1940s and 1970s recessions). Unlike gold, silver has no historic evidence of protecting against deflation (gold nearly tripled during the early-1930s). During significant bouts of deflation in the early-1920s, and again in 1929 to 1933, silver’s performance was horrible. It was also horrible as inflation subsided after the stagflation of the 1970s and early-1980s. Again, following the lack of inflation – on paper – during the Federal Reserve’s seemingly endless quantitative easing programs after the financial crisis. Current rates of inflation, as measured by consumer price index (CPI) and producer price index (PPI), could suggest prices have more to fall. The U.S. is seeing the lowest bouts of inflation in decades. The U.S. is experiencing the lowest levels of CPI outside of a recession since 1954 and the lowest PPI since 2001, following the dotcom bubble. However, silver has experienced great gains following a recession as inflation re-enters markets. Silver could get cheaper, but patience is a virtue and could reward big when inflation rears its ugly head. Please check out the original link for additional charts and graphs: bullion.directory Please follow me on Twitter @Lemieux_26 Check my posts out at: bullion.directory www.investing.com www.teachingcurrencytrading.com oilpro.com
FX_IDC:XAGUSD
by CommoditiesTrader
5
Silver at an important crossroadI just wrote about the gold/silver ratio and how it's suggesting a possible new cycle in the silver market (see suggested idea below). To further develop this hypothesis, I find that silver prices are at an important crossroad following last week's rally. The US dollar's sharp fall following the week September US employment data has given relief to battered commodities and commodity-dependent currencies (EM + Aussie + Loonie + NOK). Some are already saying that these assets are changing course, but I prefer to hold of a bit in order to confirm that a durable change in direction is in place this quarter. This is why I'm watching silver closely. The second bounce off of $14 smells like a double bottom, but I've seen such configurations be invalidated once prices hit their first resistance. With silver prices currently under a 24-month trend line (around $16.00-16.50), I would like to see a technical break before the end of the month (with more US dollar weakness) to be more convinced of the bullish prospects for this metal. Note that the RSI is also testing a long-term trendline. A break of this resistance would theoretically suggest that bullish momentum is building in the market, thereby supporting a technical break above $16. If this were to happen with a clear breakout above $16.50 (or even better $17), I would expect prices to rise back up to $19 by the end of the year. The conditions for a technical signal are thus set out, but we should all know that silver may very well start falling again so long as prices are below $16 this week. Nonetheless, there's still a decent support at $14 on which I will continue focusing in the weeks ahead.
COMEX:SI1!Long
by ABRAK75
Silver might be at the start of a new cycleThe Gold/Silver ratio is currently suggesting that silver might outperform gold if commodities continue to rise. I'm basing this mostly on the recent price action in the GC1!/SI1! ratio as signs of fatigue have appeared just below a long-term channel resistance. Note that silver prices alone successfully held the 2014 lows at $14. Those who are aggressively bullish on battered commodities are likely betting on a double bottom, which remains to be seen in the weeks ahead.
COMEX:GC1!
by ABRAK75