US Auto Sector and Broader Thoughts on the US Labor Market
This is a great overview from our friend Marc Chandler on what is happening in the auto sector and the labor market. The auto industry continues to look very weak but the question in my head is will this bring down the overall markets…
Click here to visit Marc’s website for more great post.
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Gold holds near seven-week high as investors look to Fed
Reuters – August 2, 2017
https://finance.yahoo.com/news/gold-holds-near-seven-week-012516915.html
Cory, I could sure use a sanity check from the Doc if he can get him back on here. Thanks!
+1
Doc and I exchanged messages today and he will do his best to join me tomorrow for an update! Figures crossed.
That would be great. Good luck, Cory. I’m especially wondering if Doc’s view of the Charts has changed since last report and I am going to miss the train on the PM stocks, or are things still pretty much the same and there is time for more fishing at lower prices.
When Everything Suddenly Lines Up
by @Goldfinger on August 2, 2017
“Suddenly everything I look at seems to be lining up and pointing to the same conclusion; equities are extremely vulnerable to a sudden and sharp correction. Here’s why:
Sentiment is extremely elevated and has been elevated for the last few weeks. ”
“Cash allocations have reached the lowest level (according to AAII Survey) since 2000. This means that investors are getting closer to being fully invested, which means there is less potential buying power available to drive stocks to higher levels.”
“Market leading stocks such as AMZN Amazon and TSLA Tesla have begun to top and roll over (other leaders such as NFLX Netflix are beginning to show signs of running out of fuel):”
“Rallies in the US Dollar Index have often coincided with equity market corrections. The US dollar is currently extremely oversold with an unusual extreme short positioning in US dollar futures:”
“The Nasdaq-100 is exhibiting signs of running out of steam even after blowout earnings from Apple:”
“And I could go on but you get the picture. Everything is lining up for an imminent US equity market correction. I have begun accumulating (morning of 8/2/2017) puts on the S&P 500 ETF (SPY) and a short position in the Russell 2000 (IWM). ”
https://ceo.ca/@goldfinger/when-everything-suddenly-lines-up
$ALK.AX key product markets #Gold #Copper #Zirconium #Hafnium #Niobium are recovering from their multi-year-lows and signal a return of focus to the company’s flagship project.
Edison Research sees the valuation up by 16% and a fair-value at A$0.71 /sp (previously A$0.61) In the end, they see further considerable scope for upside in the form of commercial offtake and financing and A$2.00 as possible (page 9)
http://www.alkane.com.au/images/pdf/Research-Reports/20170727.pdf
This may be good news for companies in Peru as the space continues to heat up:
Antofagasta opening exploration office in Peru by year-end
Cecilia Jamasmie | 34 minutes ago
http://www.mining.com/antofagasta-opening-exploration-office-peru-year-end/
but here’s bad news for the Philippines:
Philippines Says Open Pit Mining Ban to Stay Put
Cecilia Jamasmie | a day ago
http://www.mining.com/philippines-says-open-pit-mining-ban-stay-put/
Kim Jong Un Is a ‘Son of a B****’ With a ‘Chubby Face,’ Philippine President Duterte Says
Sofia Lotto Persio,Newsweek 6 hours ago 08/02/2017
https://www.yahoo.com/news/kim-jong-un-apos-son-130556340.html
Would have to agree…….. 🙂
I’m not a big fan of either of those guys, but it did crack me up about how Duterte called out Kim Jong Un like that.
Well Duterte…….is not trying to Nuke the world………… 🙂
Yes, but he has police and even citizens killing anyone that may have broken a crime in the streets, and he is no ally of the US. He’s just another strong man tyrant.
Good thing we have the 2nd Amendment …….
MTS Metallis Resources is up around 40% today. Wowzers.
Metallis Resources Inc. (MTS.V)
$0.235 up +$0.070 (+42.424% gain)
As of 2:22PM EDT. Market open.
SGN at 6 cents was a great buy, thanks Matthew. DT
+6
Quite a few shares changed hands during the last two months of “base-building” and I picked up a lot of them.
I note a hint of pessimism in Matthew’s latests posts. If he has doubts about the sector, it must be getting ready to crater.
Yeah, yeah, another buying opportunity (another lower low!) in an ephemeral “bull market”.
I am uncertain about the short term but still confident about the 3rd and 4th quarters.
Admittedly, the short term can inflict serious pain but I am not selling anything in anticipation that possibility. (I do trim individual positions and add to others all the time but my net exposure to the sector has, and will, remain the same.)
The market is very good at wearing down almost everyone to at least some extent, so even I can be a contrary indicator when my stress is elevated. That’s why it pays to invest with your head and not your heart.
Like I said, I am certain about the future too. I know for a fact the sun will burn itself out in 5.2 billion years. Time to start planning!
You’re comparing my outlook for the next few months to 5.2 billion years out? Do you have A.D.D.? 😮
Would really like to know what specifically spooked you. You are being a bit coy, and I have to admit it is a tad worrisome. It’s OK to be a bear, at least for now, and admit that you were wrong (in the short run)!
One thing I have made clear since last year is that I am much more confident about the second half of 2017 than the first half. The short term has been consistently difficult and a little “weird” all year. That WILL change and probably soon (1-3 weeks).
Agreed. Mid-August is a common turning point for the markets. I have been a buyer lately too.
Agreed Dan, calgary. I’ve posted this a few times this year and 2017 has roughly followed this pattern.
GOLD – 15 Year Seasonality Chart [2001 – 2015]:
Here’s the other Seasonality chart I’ve posted a few times in the past, but again, 2017 seems to be following this one for the most part. I don’t see any reason why that shouldn’t continue.
Gold Futures – 20 Year #Chart ending (12/31/2015)
http://charts.equityclock.com/seasonal_charts/futures/FUTURE_GC1.PNG
EXK breaking down on the daily chart. New yearly lows are incoming.
Does that look like a sector that has bottomed?
(AMZN) Amazon Chart. Does this look to be support, or is more downside still in store?
http://stockcharts.com/h-sc/ui?s=AMZN&p=D&yr=0&mn=3&dy=0&id=p65554675739
To Infinity and Beyond!!
EXK will likely gap down tomorrow, along with the rest of this godforsaken sector. The handwriting has been on the wall (flatlining GDXJ:GLD ratio) and the huge gap/black candle left behind on the $hui daily chart. You would have to be high on hopium to be bullish the sector.
We are due for one more summer correction in the miners, especially if the US dollar rallies. The question will be whether the Dollar just puts in a “Dead Cat Bounce” or if it really is resuming an uptrend.
If the dollar only stages a mild bounce here, then a correction in the metals may coincide, but be short-lived.
Then if the Greenback turns back down after that and plumbs lower depths, then is should kick start the rally that typically starts mid August and heads up into October for the metals and miners.
Well, this trip down is likely to take us down to the lower monthly bollinger band on the miners. There is a lot of air between here and there. Get ready for 17 or lower on GDX.
Like I said, its going to be years before GDX sees its 2016 peak, if not longer.
I’m more in the camp of just a minor draw-down here and then a surge into the Seasonally strong time of year, where there is a chance the 2016 high in gold could get retested, and that would be quite bullish for Gold and Silver miners.
Spanky:
So far, this has been a trading zone market. If this continues to be the case, between 19 and 20 on the GDX (closer to 20) will prove to be a significant support area.
However, the Dollar is bottoming, and may have done so today. If it closes tomorrow above the Monday open a needle spike low, similar to recent ones, will have developed. This would portend a trip up to 100 where gaps need filling.
Above s/b “…between 20 and 21 on the GDX (closer to 21)…”
I agree, short term weakness seems likely, but think it will be measured in weeks not months. Still looks to me like a powerful up move is brewing.
Spanky, if it could go from lows lower than here to its 2016 highs in ~6 months, on what basis do you feel so confident that it can’t happen again for ‘years if not longer’?
Solid points GH…. and good question.
The retracement from the 2016 peak has been too big in magnitude, IMO. If we had consolidated at a higher level, say HUI of 225-250, I would feel much more comfortable that another powerful leg higher was imminent.
Looking at the monthly chart for $hui, with this size of retracement back to the 20 MMA, I think we are going to drop well below the 20 MMA to balance out the chart. There is way too much overhead resistance for us to rally from here. It would be completely unnatural.
As I have said, we will tag the lower monthly bollinger on GDX before the upper. A trip down to 130-150 on HUI and then back up could play out over another year. Then another year or two just to make it back near the 2016 highs,
See $sugar monthly chart from 1999-2006. $sugar didn’t take out its initial peak until 6 years later! Note the alignment of the MAs. They are just like HUI’s now.
Thanks for taking the time to unpack your reasoning spanky. I like hearing different perspectives.
Personally I don’t believe it will take years for the mining stocks to break out, but anything is possible and it was interesting to hear why you thought that way.
Likewise, thanks for explaining.
“The retracement from the 2016 peak has been too big in magnitude” — I’m not convinced of this one. Yes, it was a large retracement–about 67.8%. But retracements of 75% or a bit more are not unheard of. James Flanagan has analyzed 200+ years of commodities market data to determine the historical parameters of moves like this. If I recall correctly the retraced DID somewhat exceed his parameters, so the rebound caught him flat-footed. But the overshoot was not very big.
When I look at the monthly charts, it varies a bit depending–GDX and $XAU have been riding the top of the 50 month simple MA; $HUI has been below the 50 MA but recently retook it. And those 50 month MAs are now leveling and will soon turn up unless the price begins to fall. So I see them as digesting the huge move in 2016 in a subtly bullish fashion (it’s in the nature of consolidations not to tip their hand in an obvious way). The 200 MAs for $HUI and $XAU are rising and will be for a long time as well, which imparts a bullish bias.
You may well be right about tagging the lower BB before the higher, but it’s not clear to me the shape that might take. The lower band is rising steeply, and if we fibrillate for another 2-3 months, touching it first might not entail much of a decline. And/or we get a very quick spike lower, like the $HUI in 2005, e.g.
I’m dubious about the comparison of sugar to the gold miners. For one thing, the 200 MAs are very different. Also, given the tricky nature of TA, I like to consider fundamentals to help interpret the technical tea leaves. The fundamental monetary situation makes me big-picture bullish on gold and gold miners, while I have no idea what the situation was with sugar. The retracement in sugar after the 2000 peak was much deeper than it has been in the $HUI so far– ~88%, vs ~68%. A final point, consider the difference of the price movement around the 50 month MA after the peak–sugar dropped well below the 50 MA, while $HUI has hugged the 50 MA and recently retaken it.
GDXJ has been the weakest, which is normal for juniors, and has presumably been exacerbated by the rebalancing of its holdings over the past few months. Still, have you noticed the picture perfect bull pennant formation that has recently broken out to the upside?
http://stockcharts.com/h-sc/ui?s=GDXJ&p=M&yr=10&mn=0&dy=0&id=p56911644287&a=406207782
When I find the interpretation of a chart to be uncertain, I look at the smaller time scale charts for clues. Again, there’s some variation between the $HUI, $XAU, GDX, GDXJ, USERX, etc., but they are all bullish. The $HUI is easily the weakest among them, but they’re all very bullish. E.g.:
http://stockcharts.com/h-sc/ui?s=%24XAU&p=W&st=1980-01-01&en=today&id=p14975074271&a=412195855
Or the daily chart:
http://stockcharts.com/h-sc/ui?s=%24XAU&p=D&yr=2&mn=0&dy=0&id=p76433300309&a=537794529
On top of a 200 MA that is flat-to-turning-up, and a recent bullish breakout of the wedge. Now we need to watch this daily downturn and how the price interacts with the MAs and this wedge formation.
Solid points on the BB rising, and the 67.8 or 75 % retracements.
While a short term turn down on a dollar rally wouldn’t be surprising, it should not be very protracted before a real rally starts in earnest.
With 3 seconds left, I just got filled for IPT at .355 (but my average for the day is closer to .37).
Saved by the bell….. Nice work!
It’s headed to USD .25 as I said months ago.
Based on what? That’s not impossible by any means but I’m curious about your reasoning.
That’s not much of a reason to me but now that I know you’re talking U.S. dollars, not Canadian, that level wouldn’t be shocking.
IPT in CAD:
http://stockcharts.com/h-sc/ui?s=IPT.V&p=W&b=5&g=0&id=p54084744863
Oh…. the black candle is your concern. I thought you meant on IPT at first, not ISVLF.
IPT.V Has everybody already forgot that January 23rd they reported drill core of 4.12m @1,613g/t Ag? It will be interesting to see at what point money flows return the Jr Ag expolrers. IPT.V included.
+1 Agreed JohnK. I’m extremely interested in how IPT Impact’s drill program goes this year.
Both Excellon and Maya Gold had out some good silver hits recently.
I want to see Alexco & Brixton put out some stellar hits this year as well.
Exploration can still move the needle….
When have the miners ever rallied after such a sideways consolidation under their long term moving averages?
Answer: never.
They need to be destroyed before any rally is possible.
Like I said above, use your head, not your heart. How can you look at the following chart and still be so scared?
http://stockcharts.com/h-sc/ui?s=GDX&p=W&yr=1&mn=11&dy=0&id=p76475941038
I bought more MUX today, KLDX yesterday, and Rye Patch last week. Without Doc here to restrain me I am out of control. MY Novo has caused all my fears to evaporate.
McEwen Mining Announces Q2 2017 Operating & Financial Results
by @nasdaq on August 2, 2017
https://ceo.ca/@nasdaq/mcewen-mining-announces-q2-2017-operating-financial
Uh-oh – Bonzo Barzini has Novo Madness !
Doc we need your medical advice to help out the KER crew. Just look at the markets on your smart phone and give us a report from the remodeled home.
Monthly stochastics are going to hit oversold before the miners bottom. I imagine there will be a significantly lower low before a final low is achieved. I think the lower monthly bollinger band will get tagged before the upper band.
http://stockcharts.com/h-sc/ui?s=GDXJ&p=M&b=5&g=0&id=p57656047534&a=537697755&listNum=1
Looking good! *Clearly* the metals have bottomed.
http://stockcharts.com/h-sc/ui?s=AG%3ASLV&p=D&b=5&g=0&id=p53827484969&a=537699019&listNum=1
The trend-line on AG is still moving up and at the end of that wedge a strong break upwards or downwards will come out of the energy compression, but my bet is on the updside breakout this fall. Until then most of these metals and miners will stay in the sideways channel.
In the short-term, a dollar rally fueled mild downturn in some of the metals or miners wouldn’t surprise me, but I’m only looking for that to be short lived before the Dollar decides to plumb new lows.
spanky – if the dollar does go down into the high 80s then that would be the catalyst to move gold to break out of the sideways consolidation and close beyond the 2016 high of $1377.50.
However, if the dollar stages a longer term rally then the trend will be sideways to down in the metals and miners. I just don’t see what would cause the US dollar to stage that strong of a comeback.
There is no way the HUI has bottomed:
http://stockcharts.com/h-sc/ui?s=%24HUI&p=M&b=5&g=0&id=p40522008313&a=537701585&listNum=1
If this is a new bull market (it is), you shouldn’t be so sure that the monthly stochastics have to go to the same low levels witnessed in recent years. Take a look at the action in 2005 or even 2008:
http://stockcharts.com/h-sc/ui?s=%24HUI&p=M&yr=16&mn=0&dy=0&id=p10033816872&a=537701585
Stochastics have gone sideways for too long now for them to turn up from here. Maybe if we got an absolute explosion upwards into month end.
The 2005 bottom came off a bounce of the lower monthly BB (20,2). 2008, well to say that was a one off would be an understatement.
HUI doesn’t necessarily have to crash here, but August-September will likely wipe out most of July’s candle, if not break well below.
And if the Fed actually reduces its balance sheet and the BoJ continues to bend over, I could easily see a new bull market in yen starting. Look at the monthly chart.
Er meant to say new bull market in USDJPY.
Re: “Stochastics have gone sideways for too long now for them to turn up from here.”
Huh? They gotta turn up somewhere!
As for 2005 and 2008, you’re missing the point. Both situations looked worse than today (2008 by a looong shot) yet the Stos did not go into the same deeply oversold readings that we saw during the recent cyclical bear market. So… I think it is a mistake on your part to conclude that the picture must get worse before it can get better.
It is bullish that the XAU has not closed a single month below the 20 month MA since February 2016.
http://stockcharts.com/h-sc/ui?s=%24XAU&p=M&yr=16&mn=0&dy=0&id=p53263273767
Of the XAU’s 29 holdings, only Primero finished higher today:
Crawling along a MA is not bullish.
Matthew you raised an interesting point on which companies did well when that many stocks on the XAU were down.
I looked at the Majors and NONE had an up day.
The Mid-Tier Gold Producers on the other hand had a much more positive day:
Stock Symbol / Mid-Tier Gold Company Name / % Chg
GUY.TO Guyana Goldfields Inc. +9.76%
DRM.AX Doray Minerals Limited +6.52%
ACA.L Acacia Mining plc +3.47%
NMI.TO KIRKLAND LAKE GOLD LTD +3.45%
ORV.TO Orvana Minerals Corp. +3.33%
KOZAL.IS Koza Altin Isletmeleri A.S. +2.84%
DNG.TO Dynacor Gold Mines Inc. +2.83%
OGC.TO OceanaGold Corporation +2.70%
NST.AX Northern Star Resources Limited +2.67%
CGG.TO China Gold International Resources Corp. Ltd. +2.41%
KCN.AX Kingsgate Consolidated Limited +2.27%
PPP Primero Mining Corp. +1.74%
PRU.TO Perseus Mining Limited +1.61%
RRL.AX Regis Resources Limited +1.03%
SLR.AX Silver Lake Resources Limited +1.11%
1818.HK Zhaojin Mining Industry Company Limited +1.10%
DGC.TO Detour Gold Corporation +0.88%
DPM.TO Dundee Precious Metals Inc. +0.76%
ASR.TO Alacer Gold Corp. +0.47%
AR.TO Argonaut Gold Inc. +0.45%
SBM.AX St Barbara Limited +0.36%
RSG.AX Resolute Mining Limited +0.19%
As far as the Small Gold Producers there were a few that still had a nice green day:
(I hold positions in 5 of these so today positive action was refreshing)
Stock Symbol / Small Gold Producer Company Name / % Chg
RED.AX Red 5 Limited +12.12%
SGN.V Scorpio Gold Corporation +8.33%
GSS Golden Star Resources Ltd. +7.85%
MYA.V Maya Gold and Silver Inc. +4.35%
MLN.V Marlin Gold Mining Ltd. +4.26%
ORA.TO Aura Minerals Inc. +3.03%
BLK.AX Blackham Resources Limited +2.70%
AMI.AX Aurelia Metals Limited +2.63%
SAU.AX Southern Gold Limited +1.79%
MTO.V Metanor Resources Inc. +1.30%
TREK.V Trek Mining Inc. +0.90%
CAL.TO Caledonia Mining Corporation Plc +0.25%
Spanky, it sure is bullish in the current context. We are looking at a correction following a triple in six months and that MA is steeply rising.
A number of the Gold Development stories had a nice positive day of gains as well:
Stock Symbol / Gold Developer Company Name % Chg
WGC.CN Winston Gold Mining Corp. +14.29%
NVO.V Novo Resources Corp. +11.48%
TSN.V Telson Resources Inc. +9.84%
NUS.TO Nautilus Minerals Inc. +7.50%
PGM.V Pure Gold Mining Inc. +5.77%
MQR.V Monarques Gold Corporation +5.00%
GOR.AX Gold Road Resources Limited +3.25%
GQC.V Goldquest Mining Corp. +3.23%
RCG.V Resource Capital Gold Corp. +2.94%
SBB.TO Sabina Gold & Silver Corp. +2.62%
TMR.TO TMAC Resources Inc. +2.53%
RUP.V Rupert Resources Ltd. +2.11%
GOM.V Golden Dawn Minerals Inc. +1.89%
HUM.L Hummingbird Resources PLC +1.89%
THM International Tower Hill Mines Ltd. +0.97%
PGLC Pershing Gold Corporation +0.96%
AGB.V Atlantic Gold Corporation +0.68%
DCN.AX Dacian Gold Limited +0.49%
I’m not going to post the Gold Explorers as there are too many of them, but there were quite a few that still had a nice up day despite the metals weakness.
Dow about to explode higher vs gold. Look at that base.
I think they get it.
I doubt that, spanky.
http://stockcharts.com/h-sc/ui?s=%24INDU&p=D&b=5&g=0&id=p93755007186
As yen gets hammered, the Dow is going to head to 23000 by EOM. Yes, it’s overbought. Look what it did in February. Unbelievable strength. I think another such run is coming as yen is bent over.
Like I used to tell my sons “if the big head can’t control the little head”, you will never be a success in any endeavor in life. LOL! DT
Nice advice Dick
a double-header….
Look at the $gold:$silver monthly chart. It’s in a new bull market, with all of the MAs bullishly aligned and rising. $silver is in trouble.
$xjy monthly. Stochastics hanging off a cliff. Looks exactly like 2012.
Just eyeballing the monthly $XJY chart, it’s in the balance and could go either way.
I don’t see much similarity to 2012.
If the monthly “full stochastics” were to turn back up right here, it would create a pattern I have never ever seen (flatlining for a handful of months just above oversold levels and then turning back up). Never say never I suppose, but I think we will get more red monthly candles soon to get the stochastics to oversold levels.
May be that an upturn in the stochastics here is uncommon behavior, though I’m not so convinced of that either. We don’t get many samples on the monthly charts to help us gauge the probability. But the charts are fractal in nature, and an upturn of stochastics from this level certainly is not unknown on shorter term charts. As Matthew has pointed out, bullish behavior is for stochastics not to reach oversold, but rather to turn up around 40.
Again, going to the shorter term charts, the weekly, while still in no-man’s land, has a bullish slant. It’s retaken the 50% level of the 2015-2016 upleg, as well as the 200 and 50 week MAs. MACD has just crossed above the 0 line. And it got good support from the fib fan and fib arc a few weeks ago. Regardless of time scale, when a bear phase is bottoming and turning back up, we often see exactly the pattern we see on the weekly yen chart–a sharp bounce up to the 200 MA, where it gets rejected, and then a sideways consolidation with smaller moves until the downward force of the 200 MA is dissipated. If a downward continuation move were in the cards, $XJY would have fallen harder upon its subsequent retests of the 200 MA. Instead, it has shown great tenacity, with two short, shallow pullbacks and now a fourth challenge of the 200 MA. Likewise it has tested the 50 MA three times in the past few months, and has shown more strength on each test. Not weak or bearish behavior.
http://stockcharts.com/h-sc/ui?s=%24XJY&p=W&yr=10&mn=0&dy=0&id=p87146502292&a=443807618
Similarly, $XJY has been challenging the 200 day MA, showing more strength each time. Uncertain, with a bullish slant. It needs to take out 91.88 and 92.32. If it fails to do that, then back down again. But even that could just be more back and forth in a sideways consolidation, or it could be more bearish in nature, only time would tell.
http://stockcharts.com/h-sc/ui?s=%24XJY&p=D&yr=1&mn=4&dy=0&id=p89111481820&a=422635193
A couple more bullish tell-tale signs on the daily GDX chart:
https://likesmoneycycletrading.wordpress.com/2017/08/01/bullish-miner-pattern-changes/
EXK is cooked. $2.00 is a natural target now.
They put out a press release today showing how much they struggled or decreased in many metrics for last quarter. I would expect some downside pressure in $EXK for the short term as a result.
It is interesting to consider how the Auto Industry is doing if one follows Platinum and Palladium, due to their importance in catalytic converters.
Here’s an interesting transaction that may revitalize a the troubled Maseve Mine that Platinum Group Metals holds:
RBPlat eyes deal with PTM over Maseve
28TH JULY 2017 – By: Natasha Odendaal
“JSE-listed Royal Bafokeng Platinum (RBPlat) on Friday confirmed that it has made a conditional nonbinding expression of interest to Platinum Group Metals (PTM) for a “possible transaction” surrounding the Maseve business.”
“The company has entered into discussions in this regard, which, if successfully concluded, may have a material effect on the company’s securities,” RBPlat said in a cautionary statement.”
http://www.miningweekly.com/article/rbplat-eyes-deal-with-ptm-over-maseve-2017-07-28