On 6/29, in the chart below , I shared (see post) … “All I wanted for Christmas was some inflation!”
Why inflation? At the time, DBC (commodities ETF) along with interest rates were falling and the media was alive with DEFLATION forecasts. Deflation represents falling prices and the potential the economy was getting worse. Not a pretty scenario to say the least. The wish for inflation was a wish for some form of improvement in the economy. Are we starting to see some improvements?
DBC is attempting to break out of this flag/pennant pattern. In the past, rising commodity prices more often than not, are tied to a global economy that is acting a little better. Not only is DBC reflecting a little strength, the Baltic Dry index is up over 40% since the lows of mid July. Railroads and Copper aren’t acting poorly either (see this post).
Any other signs of some improvement…How about below? These breakouts are a positive, like DBC!
Wave the “all is fine about the economy flag?” NO, NO and NO! A thumbs up for some potential/initial “snow flakes of improvement?” YES!
Most likely areas that should benefit “IF“ the Christmas list comes true and DBC keeps moving higher…Emerging markets, Commodities (Gold, Silver, Copper).
Game Plan…Keep long positions with stops in play! Could the DBC, high yields, Emerging markets, railroads and copper breakouts help the 500 index break above its trading range???…Stay tuned!
ЎIncreнble! No estб claro para mн, їcуmo offen que la actualizaciуn de su nombre de https://www.kimblechartingsolutions.com.
Garretot
Hey Scott…Ho, Ho, Ho on TBF!!! You and others are welcome. The break of support today should really get TBF going. Use the support break as a stop to protect gains.
I would be an owner of DBC with the top of the flag as the sell stop. Falling below support…see ya!
Chris: you noted DBC breaking out of the flag pattern at $23.40. Are you looking for an additional 1-2% move up from there to confirm the breakout before committing real money? Thanks. Also a big thanks on your recent TBF call! Yahoo!
Chris,
I’m thinking gold might be a good possibility.
Check this comparison of GLD, TLT and SPX over just about any time frame.
http://finance.yahoo.com/echarts?s=GLD+Interactive#chart9:symbol=gld;range=3m;compare=tlt+^gspc;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
Gold hasn’t just out-performed, it also seems less volatile.
I’m not a gold bug, but I think the stars are starting to align.
Speaking of sentiment…CNBC is all over the “stock” sentiment discussion today. Where is the sentiment discussion per bonds???
On 8/18, 98% of investors were BULLISH bonds, at a crossroads of resistance (see TLT quiz on dshort.com). Can you say “crowded trade?”
On 8/29, a post was made on the blog per “bonds being at a peak in elevation.” TLT was trading at 108 at the time, today its priced at 101. Almost a 7% decline in less than 3 weeks. Yeah for TBF,which was suggested to purchase in that post.
If bond buyers continue to feel the pain, anyone know where those monies will go as this crowded trade unwinds???
yeah, good point, that is the strongest time of the year in general, but politically driven market rallies do exist (Obama rally after election). Anyways, I’m confused as to what point you’re trying to make other than questioning the usefulness of that survey. Like all data points, they should be used together and not separated to make an investment decision, which is the point I was trying to make by incorporating an argument about the bond market and election year results. Best of luck of with your picks!
William,
What is the average fourth quarter gain in non-election years?
Yeah, I saw another guys post on a website about that survey as well. I’m still leaning to the bull camp short term given the bond market inflows and factors like TLT breaking the 50 day moving average right now. Also, I’ve heard some interesting election year facts like 17 of the past 20 election years ended the 4th quarter with a 6% gain in the S&P. Tax cuts seem to be good for the precious metals market. Pick your poison wisely.
Chris,
Check out the AAII sentiment gauge you pointed to a few weeks back. It’s now 50%+ bullish. That’s what I meant when I said this just telling you what the markets down recently: stocks jump up, it jumps up, stocks fall, it falls.