Not that this is news to anyone who wears a tin foil hat, but it’s officially in the mainstream now: gold prices have been “fixed” for a while now…
Big Brother IS watching. Fed stock-pumping. Libor scam. We’re running out of conspiracy theories in the “crazy” basket…
A couple of high-flying stocks, TSLA and FB, are facing resistance at the upper band of bearish “rising wedge” patterns. In both cases, the Moneyflow has been receding as prices have pushed higher.
For TSLA, the rising wedge pattern dates back just a couple of months, building off a 40% pullback late last year. Tesla (TSLA) is looking to breakout above resistance. It gapped above the trendline after reporting earnings Thursday morning and has since pulled back to the line and held. A rising wedge pattern is estimated to resolve to the downside about 66% of the time. TSLA is flirting with bucking that trend.
Facebook (FB) is facing trendline resistance that dates back to late 2012. FB has also developed a “rising wedge” pattern and is challenging the upper boundary.
The S&P bounced off support to continue its upward grind within the rising wedge I noted earlier today. It looks to me like a pattern that could break down at any time. But I wouldn’t want to bet much on it. So I am pretty agnostic about the broad U.S. market right now. However, one sector has grabbed my attention: commodities.
Unlike most equities, which have been rampaging higher for the better part of five years, commodities and commodity-driven stocks have struggled over the last two-plus years. It has been a steady beat-down for most things affiliated with agriculture and mining. But alas, that tide may be turning. The broad commodity ETF, DBC, has broken above a falling line of trendline resistance.
Without making any prediction, I do think it’s worth noting that commodities broke to the upside in 2007 just as the market was making what proved to be its multi-year top. With all the liquidity sloshing around global markets, it strikes me as possible that once again commodities will attract hot money as it flees equities in a low-growth environment. Below is a chart of the 2007 top, with S&P in black and DBC in pink.
With that pointed out, have a look at some of the more specific commodities that look like attractive to me a this time.
Coffee (JO) appears to have clearly broken to upside of a multi-year beat-down.
Silver (SLV) is still near its support line, but has popped above its resistance trendline. Gold (GLD) has too.
Gold miners (GDX and GDXJ) also appear poised to move higher.
Grains (JJG) have also broken above resistance.
I think the gist has been communicated.
I am short some things (namely financials and Japan), but am long (utilities, Treasuries), so I don’t feel like I have big directional bet at this time. Except for commodities: I am bullish. This is about as bullish as I have felt about anything in quite a while. That probably means this sector is doomed. :) But we shall see.
The equity market bounced off of its long term support earlier this month and has ripped higher. It has pushed past where it would have needed to stop for a “Head and Shoulders” pattern. Next resistance would appear to be the previous highs (1850ish on S&P) and then trendline resistance (1880ish). The bearish “rising wedge” that has formed over the last 5 years remains intact. Though it appears to be near the end, the chart has room for another year or so of gains before the lines actually converge.
I have not commented much in recent months, but I thought I might provide an updated look at how I see the S&P chart. It has been forming a rising wedge over the last 5 years and appears to be near the end of the line. This most recent breakdown is threatening the line of support. Support has been broken before – both dramatically for short periods, and slightly for longer periods – so it will take a few weeks to get a better sense for what this break means. Margin remains near all-time highs. Sentiment has come off bullish extremes though, as has been the case since 2008. Anyway, enough blather. Here is how I see the 5 year chart of SPY.
Fed’s Bill Dudley: The Fed Doesn’t Fully Understand How QE Works.
An impressive collection of charts from Safe Haven.
This billionaire threat to the Pope based on his recent criticism of unchecked capitalism speaks volumes about the hollow shell of charity among some rich.
Investopedia describes the Fed’s mandate as “to promote sustainable growth, high levels of employment, stability of prices to help preserve the purchasing power of the dollar and moderate long-term interest rates.”
After 100 years, it would seem the Fed has the perspective that all of its mandated goals are best served by working towards a single goal: promote confidence. Perhaps at any cost. Truth, if it is in conflict with confidence, takes a back seat. Sometimes, it seems, truth is thrown out of the car altogether. Given the Fed’s exclusive focus on confidence, one facet of which has been its explicit boosting of the stock market (an assertion which has moved beyond conspiracy theory and into the mainstream understanding), how much of what they say is truthworthy?
Does the hope they sell (as confidence) outweigh the truth they suppress?
Is hope devoid of truth less useful?
Is truth that begets hopelessness less useful?
Of the two, assuming mutual exclusivity, which is more important to you?
Is your answer as an individual citizen different than your answer as an individual investor? Which response is more trustworthy?
This is what it looks like when profits trump people:
I imagine that this is the recipe by which capitalism might ultimately kill itself.
Chart from Zero Hedge.
Here is a look at a rising wedge formed in SPY over the last five years. We are close to pushing the upper bounds of it once again.
Andrew Huszar has a great editorial today at WSJ about his experiences as a part of the Fed’s TARP program. It is well worth reading, here. The commentary doesn’t add much new information for those of us who have been extremely cynical of the Fed’s role in financial markets, but it continues the ever-increasing awareness that the Fed has blown a bubble and is now trapped. The Bubble has become self-aware! It’s a very funny state of existence for the financial markets. I have little doubt that ten years after the system has blown up, officials will assert that “no one could have possibly foreseen…”