It's under the level it broke.
Most simple would be for the width of the last 2 years range to double to the downside. a.k.a.medium to long term pitchfork support approx 3 years timescale hardens.
Are you watching the catapult formation in stocks evolve? My long term stops will aggressively track any breakout from that, moving them down to short term in steps on the way.
IMF or BIS leaked stories last March, so watch for regional interventions end Q3. Their insiders will trade what's coming before then.
thought you would like this article AM
Silver66 Rage against the dying of the light
Hey guys, it's been a while since I posted, but I would like to run some things by you guys. I think the policy choice has been made, we're going for deflation to deal with the massive amount of debt. The question is why?
1. We have too much debt to have interest rates move any higher from here, the proof is the yield curve and the 30 year bond yield, which is starting to scream deflation once again.
2. The only way to manage the debt is going to be NEGATIVE interest rates for the US, that means we they are going to kill all growth and any chances of inflation.
3. The Trump inflation theme lasted about 6 weeks and peaked in Feb of 2018, the markets know there's no infrastructure spending coming, there's no credit growth, money supply (M2) is crashing, velocity of money is still dead, no real tariffs are coming and the corporate tax cuts are actually deflationary.
4. We are going to be like the EU/Japan and live with negative rates to deal with interest on the debt, the only way to handle that reality with be to also cut the deficit. How will they do it? They're going to slash ALL social services to cut spending, and the cuts will be very large.
5. The net result will be a strong US dollar despite the fact the US debt will grow larger. As we know, the more debt issued is now making the dollar even stronger. This is not going to stop.
6. Why choose this path? Because it buys more time than any other policy. The goal is to maintain the value of the debt and to get whatever interest payments they can get under the circumstances.
7. What about hard assets (gold and silver)? This is the bad news, there's not going to be any reflation white knight to the rescue this time, there will be no help for Main Street and most people are going to suffer as a result.
8. The stock market has a little more time to celebrate the lower yields and downturn in commodity prices that will be coming in the months and years ahead. But at the end of the day, ALL asset prices are going lower with the exception of US bonds and the US dollar.
9. All the gold bugs are missing it here, more QE won't matter, lower interest rates won't matter. They're going to kill the economies and kill any chance of inflation. We are headed for true deflation.
10. When the people in power control BOTH monetary and fiscal policy, and they're pushed into a corner with too much debt, they're NOT going to inflate it away, they're going to buy time (maybe 10 or more years) and choose deflationary policies.
The ones who rules us created all the problems. It has affected all aspects of society and its institutions. The 1% or the upper 1/10 of 1% has benefited at the expense of almost everyone else who isn't in the club. They control and own everything. So they will manage economies in the form of a controlled demolition. The masses will be allowed to suffer; forcing them to sell what they have accumulated. Meanwhile; Sinclair, Holter and their ilk will keep saying it ain't so.
The comments are good. (while also including the usual ZH bs comments as well.)
No quarter or clean sheet given for his conversion (made under duress!) away from making SJW shark attacks.
@Zman: I am with you on much of those points.
But for a couple of them i would think that there are more than one "powers that be", and due to conflict of interests at such levels there will be either-or type scenarios set up, depending upon who exactly gets (more of) their way.
A better way to look at this, (and by better I mean easier to work with towards a practical result) is that bonds have made a multi decade to multi century top, and yields a similar scale of a bottom. Our difficulty is knowing exactly what scale is involved, and this particular problem perplexes the people trying to run the monetary system also.
So .... if we are looking at eg a 30 year bear for bonds, the question I want to answer is this: What duration and size of a reversal pattern must form to provide a base for yields to arise from for such a long period? This is another way of asking: How long will churning persist before trending sets in again?
Range trade or trade breakouts, in other words?
In a "normal" situation, it seems reasonable to expect a base formation to last 1/4 to 1/3 or 1/2 of the following trend, maybe. And if that were the case, half of the base might be before the top/bottom and the other half after it.
Now let's look at the central bankers' perspective. They are "trading" or controlling if you prefer, a thirty or seventy year class market scale in their eyes. Say 30+ for the moment, though Kyle Bass says 70+ and I firmly agree with that as a minimum. In fact you'll remember I gave precise examples here in Setup of 144 year recurrence of signature events earlier this year. But go for 30+, say 36 years. 1/4 of 36 years would be 9 years. So a 9 year cycle before the yields low, and another 9 years after it. In that case.
Before the BIG breakout. The point is. If we lose sense of scale we will confuse big trends (under the common understanding of big), that are actually only swings constructing a bigger range.
But if it were to be a 70 years scale breakout, then 1/4 x 70 (say 72) would be 18 years of a trading range to construct a reversal pattern. What would an 18 year head and shoulders look like if it went that way? For such an outcome, (it could be a double bottom/top, or a triple or other combination instead) this would imply an eg seven years up in rates/down in bonds, followed by an 11 years pullback to consolidate prior to the following trend swing including a long term breakout.
Now take that scenario, are there many that can regard a seven years rise in rates as a trading range swing? Because that is a possible correct reading of such a move were current bond price changes to evolve into that.
The currency forecast for the dollar mentioned in your list is contentious with me because there is an FX system reset going on at the moment. I suggest trying to consider scenarios but using different input factors, because this constructing particular USD FX one is a building built on quicksand. The debt might be a stronger base upon which to erect and work on various scenarios. I am currently using an intermediate prominent currency as a proxy for the SDR basket in this regard.
I hope this is helpful. Some "knowns" to work with. (And many unknowns involved presently.)
"A better way to look at this, is that bonds made a multi decades to multi century top"
That may be true or it might be just a correction. Bonds have been trading lower since July of 2016, that does NOT mean it's now a long term bear market in bonds. We could take out those July of 2016 highs in the next 12-18 months. We must remember that most of this trade is based on the Trump hope, which is based on talk and not action.
The last I looked, the speculators are massively SHORT the bond market based on 1. Growth 2. Inflation 3. Infrastructure spending 4. Tariffs 5. The fed hiking rates. They are trapped on the wrong side based on emotion. The bankers are MASSIVELY long bonds here, why? Because they know they suckered people based on pure hope, not reality.
"there is an FX system reset going on at the moment"
I think what most people don't understand is the environment that's needed for lower bond yields. It's not about the Fed trying to "manipulate" the yields, it's about creating an economic system which is filled with deflation with FISCAL policy. The people in power are going to cut off the peasants with credit and social services once this deflationary policy comes into full force.
The next question remains, what about all of the debt (not including T-bonds) that's going to potentially (student loans, credit card, auto loans, mortgage, corporate and municipal) going to default? In my opinion, the Fed will buy all of the bad debt and make sure the bond holders are in fine shape. BUT- this will be the excuse for the credit train to come to an end for Main Street.
What about the emerging market debt that needs to be paid back in US dollars? My guess is these bond holders will see real defaults.
All of this enables the US to still run large deficits and have NO issues finding buyers at NEGATIVE yields. It also enables globalization to maintain the trade imbalances.
If the people in power wanted to inflate the debt away, they would have done it a LONG time ago. It's not going to happen.
Gold bugs are actually the most optimistic investors of them all, they truly believe they're going to be saved with "helicopter money" or "stimulus" to help them out. The people in power aren't that nice, they're doing the opposite and will only do more when they get pushed into a corner.
My bet is lower bond yields, they have no choice at this point. They must deflate the debt away!
zman wrote: Gold bugs are actually the most optimistic investors of them all, they truly believe they're going to be saved with "helicopter money" or "stimulus" to help them out.
Gold bugs are actually the most optimistic investors of them all, they truly believe they're going to be saved with "helicopter money" or "stimulus" to help them out.
zman wrote: The people in power aren't that nice, they're doing the opposite and will only do more when they get pushed into a corner.
The people in power aren't that nice, they're doing the opposite and will only do more when they get pushed into a corner.
Other than that yes Mike Maloney has been saying for years, first deflation, then inflation. My knowledge regarding the mechanisms for timing the both forces when they will shift are too limited. Precious metals stocks looks cheap in a historical perspective, bonds and stocks looks expensive. I am just trying to keep it simple, but I am also always early.
Cheap can get cheaper in a hurry ...
*** BRITISH OPEN ***
Time to relax a bit, watching British Open my favorite Major.
Silver66, do you know why we love golf so much? I figured it out a couple of years ago. I guess I am the only one with that theory this is a secret that Tiger Woods, Rory McIlroy, Dustin Johnson, Phil Mickelson or Henrik Stenson know nothing about.
Solsson wrote: zman wrote: Gold bugs are actually the most optimistic investors of them all, they truly believe they're going to be saved with "helicopter money" or "stimulus" to help them out. There are much smarter and above all, gold bugs with deeper pockets than Solsson and Joe Silverpack out there. zman wrote: The people in power aren't that nice, they're doing the opposite and will only do more when they get pushed into a corner. There are people in power that are not nice to other people in power. Other countries than the US are affecting the price of gold. Other than that yes Mike Maloney has been saying for years, first deflation, then inflation. My knowledge regarding the mechanisms for timing the both forces when they will shift are too limited. Precious metals stocks looks cheap in a historical perspective, bonds and stocks looks expensive. I am just trying to keep it simple, but I am also always early. Cheap can get cheaper in a hurry ...
"Other countries other than the US affecting the price of gold"
Well, here is where the problem lies today. China and India are seeing their currencies killed relative to the US dollar today, that means the lower gold prices are NOT lower for them at all. In fact, they're experiencing higher costs in general, which means less money to buy gold.
"bonds and stocks look expensive"
On a historic basis stocks do look expensive, but I'm sure stocks will get even more expensive.
As far as bonds, TPTB are creating an environment that will make today's bond prices very cheap. How about buying the 30 year bond with a 3% yield and holding it until it trades at -3%?
Where will gold trade at in that environment? $700 oz?
"Cheap can get cheaper in a hurry"
Ain't that the truth!
It is a game to be mastered but never conquered, just like life.
silver66 wrote: It is a game to be mastered but never conquered, just like life.
That's the poetic version, but I got a mathematical version.
The construction of the game is fractal it's the Golden game designed by mother nature. I think Argentus agrees.
From my home course hole 11 a par5:
end of long game
Short game, missed green chip
1st putt 5yards
2nd putt 2yards
3rd and last putt 1yard
It's a reversed Leonardo da Pisa sequence game, cool isn't it
... oh a double bogey no that's not so cool.
Very interesting chart imo, we've not broken the main resistance yet:
What do you consider to be a big trade for gold?
Long term indicates entry at a long term low, reclamation of a previous bear trend in it's entirety, to a price which is approx + 2% annual increase from a previous long term high.
A full upswing from the low minus entry and exit slippage.
Naturally every time is of course expected to differ, but long term gives possibility for such a range return trade.
If this year were to be such a low, then 2011 high 1950 plus 2% annually would place the upper range edge at 1950+17% which would be 2280, plus 2% extra for every year taken after this year to get there. From eg 1100 that would represent 100% gain on spot plus possibly 4-5 years up which would be another 8-10% on spot.
Depends on the low, which may not be in yet or (possibly) was made 2 1/2 years ago, and it's timing.
If we for example next February were below my stops I would recalibrate the dimensions of the bear swing, which is to say I have both price and time stops to identify whether a low is in, or more declines likely or probable.
And I am aware that logarithmic decline of the denominator fiat FX is not built into the above.
Sounds very reasonable to me. Not super hype.
Ronnie Fattal on silver and gold:
It's still about the 1236 price level for gold, and presently gold is under it.
I like Elliott wave when it gives you a choice of counts like he has laid out. I also like Craig's outlook re: manipulation which seems to make Elliott wave and TA look bad. But I do think Elliott wave will shine when we eventually break lose of the manipulations and Price Discovery returns.
It's the bees knees when prices are trending. Not so much during consolidations. As for every approach, better with EW than without. i find it goes well with cycles, particularly the morphing kind.
I mentioned the catapult pattern above, when discussing stocks.
Here it is:
It's a Point & Figure pattern, did I mention that?
The pullback retraced prior to breakout is the key. Now have a look at SPX...
Two recent bullish catapult examples in 2 hour timescale:
This is a brief excursion down the fractal scales for me. In the larger scales I hear a certain fat lady practising her notes in the wings as she patiently awaits her turn.
To reuse that Monty Python phrase ... during the meanwhile .... we are in summer doldrums and counter trend swings can exaggerate, stops at greater distance get hit, all the usual.