Tag: biiwii.com

Gold Mining is Counter Cyclical

Posted on by The INO.com Team

The following is the opening segment of this week’s Notes From the Rabbit Hole, NFTRH 276:

Somewhere along the road from the 2000 bottom in gold stocks to the 2008 flame out of inflationary hysteria, the gold stock sector went from counter cyclical first mover to ‘inflation trade’ also ran.  Gold stocks put in a secular bear market bottom in 2000 just as the US and many global economies were topping out.

Then came the era that NFTRH has labeled ‘Inflation onDemand’ (IoD).  The economy was successfully* inflated by Alan Greenspan early in the decade as easy monetary policy fomented an epic credit bubble, which took over and did the heavy lifting for a cyclical bull market and buoyant economy that terminated hard in 2007/2008.

During this time of IoD ‘inflation bulls’ and commodity bulls who had all the answers for a newly inflation-phobic public emerged and took center stage.  Misperceptions were formed, cemented and driven home.  Nowhere were the misperceptions more intensely and dangerously embedded than the gold stock sector, which at its core is different than most commodity sectors and indeed, most stock sectors.  Introducing another one of our ‘busy’ charts to illustrate…

hui.mo

Okay, article over… the chart says it all.  No more words necessary! Continue reading "Gold Mining is Counter Cyclical" →

Closing the 2008 'Gap'

Posted on by admin

A disclaimer:  I am long and/or trading several regular 'bull stocks' (as well as short a couple).  Don't interpret the sober message below as a 'sell your stocks right now!' style bearish warning.  Indeed, after an expected choppy start to December I think more bull market mania, errr… rally, could still be ahead.  But it would be just dandy if people would keep their perspective along the way.

From the December 1 edition of Notes From the Rabbit Hole (NFTRH 267):

In 2008 market and economic participants suffered a hard downside 'gap' in the prices of their assets and in the levels of their expectations.  The bull market that began in March of 2009 is doing a fine job of closing that gap and fully resetting the herd from the utter fear mode of Q4, 2008 to a 2007 or even 1999 style greed mode today. Continue reading "Closing the 2008 'Gap'" →

Janet Yellen Nails it

Posted on by The INO.com Team

From an earlier post by Biiwii.com guest Doug Noland:

Senator Dean Heller: "A quick question about quantitative easing: Do you see it causing an equity bubble in today’s stock market?"

Yellen: "I mean, stock prices have risen pretty robustly. But I think that if you look at traditional valuation measures, the kind of things that we monitor, akin to price-equity ratios, you would not see stock prices in territory that suggests bubble-like conditions. When we look at a measure of what’s called the equity risk premium, which is the differential between the expected return on stocks and safe assets like bonds, that premium is not – is somewhat elevated historically, which again suggests valuations that are not in bubble territory."

Thank you Ms. Yellen for testifying to my point.  Equities are not in a bubble by "traditional valuation measures", just as I have been saying.  If you are sincerely and actively bearish the market you had better be bearish because you either think monetary policy is about to fail (i.e. its efficacy is going to wane) or that policy makers are going to be forced to cease and desist, most likely by the Treasury bond market. Continue reading "Janet Yellen Nails it" →

3P's Supporting Massive Market Speculation

Posted on by The INO.com Team

Policy, Profits and Propping… that is without a doubt the underlying fundamental support for a massive and growing phase of market speculation that becomes more dangerous with every week that it lurches forward.  Once again, the chart that proves this in no uncertain terms:

ppp

‘Policy, Profits & Propping‘ courtesy of SlopeCharts

 

Note the 3 humps on the S&P 500 (orange).  Again we review… Continue reading "3P's Supporting Massive Market Speculation" →

Insurance in Wonderland

Posted on by The INO.com Team

The following is excerpted from the October 13 edition of Notes From the Rabbit Hole.  The segment followed a review of NFTRH's big picture stance on gold vs. various assets positively correlated to the global economy.  Specifically, the previous segment concluded that yes, the NFTRH big secular view is under threat by a technical analysis signal favoring US stocks over gold on the big picture per this monthly chart of SPX-Gold.  NFTRH first began managing this as the bottoming pattern broke above its neckline and then the EMA 10 crossed above the EMA 20 for the first time since 2001. Continue reading "Insurance in Wonderland" →