Author: Gold News Club

Source: Clive Maund for Streetwise Reports   05/04/2020

Technical analyst Clive Maund charts the markets and discusses what he believes is ahead for stocks, the dollar and commodities.

Notwithstanding the Fed’s seemingly limitless ability to create money to throw at the stock market, which has caused it to rally in recent weeks in the face of a dead economy and apocalyptic jobs data and earnings, etc., all the charts we are going to look at here point to another severe downleg soon.

My attention was drawn to a bearish Rising Wedge completing in the London FTSE index by a colleague in England. So I took a look at it, and sure enough it is. So, I thought I’d take a look at a couple of other European indices, the CAC 40 in France and the German DAX Composite, which showed a very similar picture. Their charts are shown below and as you will see, they are both very bearish, and point to a break lower soon leading to a severe decline.

You will recall that we were thrown somewhat a week or two ago, when the main U.S. indices, the Dow Jones Industrials and the S&P500 index, broke down from their bearish Rising Wedges but then didn’t follow through, and instead rose to new highs for the rally from the March lows, which caused us to dump our Puts and then bide our time to see what transpired. The sharp drop at the end of the month—this past Friday—jolted me into action and prompted me to hunt around in a quest for greater clarity regarding what is going on, and it has turned out to be a rewarding search.

While it’s not exactly clear what is going on with the main U.S. indices, the picture becomes much clearer when we look at the broader but much less used Wilshire 5000 index. Take a look at this first of all—it’s a 5-month chart for the Wilshire 5000 that reveals that it didn’t break down from its Rising Wedge about 10 days ago, unlike the Dow Industrials and the S&P500 index, but it did last Friday, which happened to be the end of the month, by a significant margin. This is regarded as an ominous development that probably marks the start of the second major downleg of this bear market. We can also see that the countertrend rally got stopped by the important resistance level shown.

Now take a look at this. The following chart shows that the breakdown from the Wedge happened just two days after the Wilshire 5000 had arrived at an upper range Fibonacci target at a retracement level of 61.8% of the preceding first leg down of the bear market. This is normally as far as a retracement following the first leg down of a bear market gets, and the same happened following the Tech bubble peak in 2000 and the start of the 2007–2008 meltdown.

If we now compare the Wilshire charts above with the S&P500 index chart we realize that the breakdown by the latter about 10 days ago was a false breakdown, inasmuch as, as we have just seen, the Wilshire did not break down at that time.

If we see another heavy drop in the broad stock market shortly, it is of course reasonable to presume that it will coincide with a strong rally in the dollar, so how does that look now? On the following 5-month chart for the dollar index, which has the S&P500 index placed above and gold below for direct comparison, there are several very important points to observe. The first is that when the market tanked into mid-March, the dollar soared just as we would expect it to and as happened in 2008. Then it dropped back sharply later in March as the market rebounded, but it has since been tracking sideways in a trading range marking time as the stock market continued to ascend to complete its relief rally. Right now it is at the support at the bottom of this range where a doji candle formed on Friday suggesting that it is about to start higher again. If the market now proceeds to tank in a second major downwave then we can expect the dollar to soar again, bust out of the top of the current range and probably exceed its mid-March highs.

If the dollar soars then commodities are likely to take another broadside, just as in the first half of March, and just as in 2008, and gold and silver are unlikely to be spared—the Gold Miners Bullish Percent Index is now at an extreme reading of 92% bullish. Copper in particular looks like it will get crushed by another downwave that should take it to new bear market lows by a wide margin.

Originally posted on CliveMaund.com at 4.35 pm EDT on 2nd May 2020.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

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Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Charts provided by the author.

CliveMaund.com Disclosure:
The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.

Source: Michael Ballanger for Streetwise Reports   05/04/2020

Sector expert Michael Ballanger reflects on how Rodney Dangerfield’s famous one-liner applies to today’s gold market.

In March 1967, for most of the adult population in North America, the most popular comedians were almost all television series personalities, such as Carol Burnett, Buddy Ebsen and Dick Van Dyke. These stars were the softcore comics enjoyed by the parents of the Boomer generation, whose appetite for laughter was sated by inoffensive gags, slapstick and one-liners.

For my crowd, however, the sanitized, Wonder Bread content of the ’60s could not survive the onslaught of underground, drug-fueled witticisms of people like Lenny Bruce, whose outrageous anti-establishment rants resulted in him being blacklisted from Hollywood and banned from television.

As the ’60s wore on, the underground mantle was passed on to comedians like George Carlin and Richard Pryor, who were able to present two completely different acts, with the heavily censored TV versions violently contrasted with their nightclub acts, which were obscene, politically charged and outright raw. Sitting in the high school cafeteria every Monday morning, my friends and I would always get into a critique of whichever corny stand-up comedian wound up as filler on the Ed Sullivan Show, where such notables as Bill Cosby and Godfrey Cambridge would appear regularly until their careers took off.

One such morning, after doubling over with laughter the previous evening for a solid 8-10 minutes, I asked if anyone had seen “this guy from New York called Rodney Dangerfield,” to which they all said “No.” I raved about his self-deprecating “schtick,” filled with one-liners like “I don’t get no respect. My son takes his mother to a father-and-son banquet!” or “My wife only has sex with me for a purpose. Last night it was to time an egg!” or my absolute favorite: “I drink too much. The last time I gave a urine sample it had an olive in it.” All were followed, at one time or another, with two words “No respect.“

Dangerfield’s show-stealing routine that night on Ed Sullivan was repeated again a month later, and on the following morning, my classmates absolutely chastised me, using descriptives for Rodney like “ridiculous,” “so unhip,” and “outright disgusting.” But to no one’s surprise, it could not deter me. For the next two decades, I never missed a chance to see him perform, his live show insanely off-color and riddled with four-letter words, but never with one shred of political satire or innuendo. The crescendo performance of Dangerfield’s career was as nouveau-riche businessman Al Czervik in “Caddyshack,” where he dominated every scene with lines like, “He called me a baboon; he thinks I’m his wife!” and “Last time a saw a mouth like that it had a hook in it!” He got a lot of respect in that film and deserved it.

Whenever I look at the gold market these days, the only words that come to mind are “no respect.” Trillions of international currency units created out of thin air to rescue the global bull market in stocks, with Wall Street and Main Street the main recipients. What is interesting is that since the Fear-Greed Index hit the famous “1” mark in mid-March, when the Fed announced intentions to buy every single security found in all hedge fund portfolios regardless of name or location, including junk bonds, stocks and exchange-traded funds (ETFs), the evidence shows that they actually have not purchased any of the said securities, as the chart below would confirm.

Once again, the brain surgeons over at the Fed talked a good game but that is all it was—a game designed to stem the panic that was threatening to (and did) derail the bull market. I believe that what happened by the end of the week was that Wall Street suddenly woke up to the realization that the Fed had shifted loyalties from Wall Street to Main Street, largely due to the public perception that they were, once again, exactly as happened in 2008, being picked over by the bailout kings in favor of foreign banks and elitist-owned corporate America.

Whether or not the Fed was “politicized” after mid-March is a moot point; the S&P 500 stopped dead in its tracks a hair below the 200 daily moving average (dma) at 297.47. It also reversed just after the April 29 Federal Open Market Committee (FOMC) testimony by newly appointed hero and soon-to-be-announced “Man of the Year” for 2020, Jerome Powell, the “serial printer of last resort,” whose remarks were focused primarily on Main Street as opposed to Wall Street. This, in an important election year, is good for the incumbent and not so good for political donations from the white gloves gang in New York.

As for gold, I have the distinct impression that after the normal first-of-month institutional flows are spent with a distinctly newfound bullish bias toward gold and the miners, a more meaningful correction, not unlike 2009, could get rolling. On Friday morning (May 1), the flows have taken gold and the miners from deeply negative on the opening to positive on the session, which suggests that the generalists have made the move to own precious metals. Since the generalists tend to be late to the party, it is bearish near term but undoubtedly bullish longer term, as global allocations are less than 0.5% and at the end of 2011, they were nearly 5%.

Having navigated through numerous bull and bear markets with varying degrees of success (and failure), the key to survival is once again found in the preaching of the late Richard Russell, who always claimed that “the winner in a bear market is he or she that loses the least.” In bull markets, the victory lap specialists always make the mistake of confusing bull markets with brains, and it is this misplaced complacency that arrives as your arch enemy. Hubris is the harbinger of failure and one way to sidestep that trap is to keep preservation of capital as your primary objective in times like these.

I always keep a large cash position in place, and certainly until the evidence clearly indicates that the global economy can recover. Even the gold and silver markets, as ridiculously undervalued in U.S. dollar terms as they are, cannot withstand the impact of a deflationary wave that totally swamps the efforts of the Fed and its money-printing brethren around the globe. Safety over stardust; caution over calamity; modesty over hubris. . .

Speaking of “no respect,” I always know when gold is in trouble because my trusty canine compadre “Fido” is usually not to be found within a hundred feet of me and my sailing quote monitors and Jim Cramer dartboards. The only dog in history truly clairvoyant, he gives me a hint that gold is due to bottom when I see him peering into the den to see if it is “safe,” sniffing the floor in search of broken shards of wine bottle glass and or ill-targeted beer tankards.

Well, this week I went out to his tool shed “hiding hole,” forgetting that I was wearing my virus-preventing surgical mask (made from an old hockey sock and some tie-downs) and when he saw me approaching, he went into full “attack mode,” chasing me to within one arse-bite of an outcome as I scampered through the garage door to the sounds of primal growls and gnashing fangs.

No respect, indeed.

Originally published May 1, 2020.

Follow Michael Ballanger on Twitter @MiningJunkie.

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

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Disclosure:
1) Statements and opinions expressed are the opinions of Michael Ballanger and not of Streetwise Reports or its officers. Michael Ballanger is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. Michael Ballanger was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Michael Ballanger Disclaimer:
This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.

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