Inflation Reaches Peak Narrative

11:32 a.m., EST:

Just like ‘peak oil’ back in the summer of 2008, now it looks like we’ve reached ‘peak narrative’ for inflation.

‘Narrative’, because the markets are a game of manipulation.

If you don’t know who’s being manipulated, then that person is you (slightly changing a Buffett quote).

Bolstering the assessment, is this report from ZeroHedge.

Looks like everybody’s on board and reporting higher prices. Just like they were on board last year with: “We’re all in this together”.

The exact same tag-line for every major U.S. corporation … with ready made (like they knew ahead of time) banners to boot.

The problem is, the markets are not following along.

Reported two days ago, senior gold miners are testing their reversal.

Yesterday, was an upward push that wound up being an ‘out-side-down’ bar (GLD, GDXJ, SLV) … a reversal in itself.

That’s not in the script. Or, is it?

At this point, the public’s literally redirected, manipulated, at will. It’s a sick game being played by all who control the media.

From a personal standpoint, I’d rather make some popcorn, take my red wagon full of fiat, go camp down around $800/oz., and wait.

The gold ice cream man may never show up. If he does, great.

If not, there’re other opportunities; at least I’ll not be one of the manipulated masses screaming inflation hyperbole if/as/when gold ratchets all the way down.

Stay Tuned

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Gold, The Big Picture

The bottom line for gold is: Retrace, lower

No-one in the inflation camp wants to hear that … it’s uncomfortable to face the potential of being so wrong.

Albeit wrong in the short term but probably right later … after it’s too late. More on that farther down.

Just like the lazy (and complicit, we might add) financial journalist publishing the standard (speck blaming) propaganda for the day, so too are the hyper-inflationists, jumping on the most popular bandwagon in town.

Not even considering the potential for a retrace; admittedly, which could be short and sharp but significant nonetheless.

This site has presented several times, we’re in a situation similar to that of Genesis 41. It’s the corn and grain first … then gold and silver.

Just to back that up a bit before getting to the charts, we have the following:

Crop failures world-wide

Systematic destruction of the food supply chain

Systematic elimination of farms and viable (for millennia) ranching practices.

Solar minima activity (decreased sun-spots) causing erratic weather patterns, shifting growing zones; even as far as sub Sahara, Sudan.

Those so focused on stacking metals will likely be using that stack to pry much needed food, food staples, seeds and fertilizer out of the hands of those not willing to sell … at any price.

Why are the oligarchs not worried about the ‘little guy’ stacking metals?

Because there’re going to make it irrelevant … at least for just long enough to completely bankrupt, starve or ‘inject’ the middle class.

Moving on to the charts:

The title header said ‘big picture’. Here we are with monthly gold charts going back to the 1950s, time-frame.

It’s been a long … long bull market. It appears to have made a top at ~1,972 and is retracing … if only just a bit.

The second chart is the one that gives us pause. Consider the potential for a more substantial pull-back.

Markets like to retrace and test. It’s what they do.

That second chart is scary. It’s plain, the 760 – 780 area is a long time (monthly) support level that goes all the way back to 1980.

Absolutely no-one expects, or is planning for gold to get back to $800/oz, or lower.

Think of the irony. The ‘stackers’ (and maybe the rest of us), having to exchange actual money, gold and silver, for worthless fiat just so they/we can buy food to stay alive.

After the middle class stackers have exhausted their metals hoard, that’s when gold and silver will launch into the next bull phase.

It has been done this way (keeping the peasants under control), literally for millennia. The method works … why change?

Summary:

The intent here, is to at least recognize the possibility for the above scenario. It’s clear and becoming more clear every day, food is the weapon of choice.

The objective is to have enough food ahead of time; be in position to take advantage of once-in-a-lifetime metals prices should that opportunity be presented.

Stay Tuned

Charts by Macrotrends

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Silver: Sunday & Overnight

It’s about 9:37p.m. EST, on Sunday. Price action in the futures markets (SIK21) has silver up about +0.40%.

Projecting that action onto the regular daily session of silver, has it within the black box; located right up against the blue trend line.

At this juncture, the down-trend is still in effect.

In others markets … real estate:

A report just out by Uneducated Economist has ‘boots on the ground’ reports lumber inventory (for housing construction) is piling up at mills at levels never before seen … ‘stacked to the rafters’.

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Technical Discussion: Silver

This is going to be one of those technical discussions that are tedious and long-winded (also to include at least one boring anecdote).

If desired, go to the Summary for the CliffsNotes wrap up.

For the rest, let’s get into it:

A quick look at the news and financial sites has the inflation narrative still raging.

This link to an article on ZeroHedge offers a slightly different perspective than one-way hyperinflation.

At least it says deflation is a possibility.

Back in the day, I used to read as many of these press releases as possible; combine them, put them in a spreadsheet, develop a ‘voting’ system (with variable adjusted algorithmic weighting), look at buy and sell recommendations, try to figure out if MACD, RSI and Stochastics could predict the next move … and then, I would watch Wall Street Week with Louis Rukeyser.

It’s a frustrating, unprofitable exercise that was ultimately abandoned while the search for market truth carried on; only to be found much later in 2007; that’s a story for another time.

There’s nothing wrong with Rukeyser. In fact, I did use his program (once) in what was at the time, a trade of pure intuition.

During his opening monologue (probably May 19th, 1989), Rukeyser talked about gold reaching multi-year lows.

At the time, I had been monitoring the gold miners and specifically Echo Bay Mines (ECO). Echo is now part of Kinross Gold.

The sense was ECO had slowed its decline and seemed ready to move higher. Gold also felt like it might retrace part of its decline.

The trade result is on the chart below:

The entry date for going long ECO was May 22, 1989, a Monday.

That would seem to follow if Rukeyser’s gold statements were on his (prior) Friday broadcast.

As the chart shows, gold bounced and then went slightly lower before going into a sharp (but short) rise.

The exit came on January 23rd 1990, right at the top of the brief move.

Once again, it was from intuitive feeling that gold had reached some kind of stopping point.

What solidified thinking ‘we’re at a top’, was Joe Granville coming out in his newsletter that he was going “all-in” on gold.

At the time, Granville was not making good market calls. This one seemed like a stab for attention as by now, gold was in the news.

To add to the nostalgia (looking at the confirmations), commission for going long (100 shares) was $47.60 and for getting out, $49.00

Many decades later and in retrospect, the trade worked because it was sentiment based.

After declining steadily for two years, gold sentiment was negative. At the top in January ’90, it had tuned positive.

What does all that have to do with today?

Looking at the chart of gold above, you’ll note a sharp rise in price from June of ’86 to October ’86. In effect, it’s a wide price bar.

From Wyckoff analysis, markets tend to come back to wide areas for a test. That’s exactly what we see from December ’87, onward.

Now, let’s look at the monthly close of silver (SLV):

The chart shows how each wide bar has (ultimately) been tested. Price action either rises to test or declines … but it does test.

This is how markets behave. It’s what they do.

Looking at the current situation for silver, one would think it’s time to exit (if long); anticipating a retrace or go short (not advice, not a recommendation).

There’s a wide bar from the March 2020, low to the August 2020 high, that has not been tested.

That (test) thinking is bolstered further, by the chart below:

On a monthly closing basis, SLV has pivoted (down) off the 38.2% Fibonacci retrace level when looking at the entire decline from April 2011, to march 2020.

In addition, it tagged the 23.6% level as a pivot to the upside which led into the now famous, but fading fast, ‘short-squeeze’.

It’s important to note, the short squeeze was so weak, it could not even register a new closing high on the monthly chart.

Summary:

It’s not important or profitable to figure out whether it’s inflation or deflation. The important part (and the hard part) is to read the price action itself.

That price action … at least for silver, is saying we’re at a juncture (Friday’s close) where SLV’s in position to retrace and test the wide trading area created from March – August, of last year.

A retrace is possible because that’s what markets do. Our anecdote example from 1989, shows that markets do not change.

If silver, SLV opens lower on Monday, it weights the probability we’re on our way to the 17.50 – 18.00 level and/or a test the March ’20 lows.

If it opens higher, the market’s in spring position (ready to head higher) as described in this link.

Stay Tuned

Charts by StockCharts & macrotrends

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Market Duality: Silver

Silver, SLV’s at a juncture where it can either go sharply higher or continue lower from here

Punching through support puts SLV at the danger point.

Whenever price action penetrates support and hesitates, it’s in Wyckoff spring position; poised to move higher.

Because we’ve got a weekly MACD bearish divergence in addition to a huge volume ‘changing of hands’ on February 1st, probability would favor downside action … continuing on to 17.50 – 18.00 area.

Nonetheless, SLV could rally from here … even in the midst of a longer term bearish (deflationary) environment.

The precious metals sector is a crowded trade and one to be avoided (not advice, not a recommendation).

An interesting post on the current inflation/deflation scenario is here.

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The 2021 Top

Empirical data shows market tops tend to occur before, during, or just after a holiday week.

Probably the most famous market top, was September 3rd, 1929.

That top was the Tuesday following the Labor Day weekend.

Now, we have another potential Tuesday top; February 16th. The Tuesday following the President’s Day Weekend.

While shiny object distractions abound; Game Stop (GME) hearings, Silver (SLV) squeeze, Bond (TLT) rout and more, the market may have quietly and without fanfare, put in the highs for the year.

Judging from the internet and YouTube chatter, everyone’s expecting some type of immediate crash.

Well, since everyone’s expecting it, it’s not likely to happen. Or more accurately, not the way anyone expects.

The last meltdown about a year ago was pretty much a straight-down affair. If we’ve seen the highs, what happened last time won’t happen this time.

That leaves at least two options:

  1. Gap down 15% – 30% or more, overnight.
  2. Slow, grinding decline, hardly noticeable until one day …

The chart of SPY below shows a possible Head & Shoulders, top formation. It’s still very early in the chart as even the head of the pattern’s not yet complete.

Nonetheless, it’s important to be ahead of the game and anticipate the next moves of the market.

Note the volume’s tapering off as we get into a possible head formation. If there’s to be a Right Shoulder, a textbook case will have volume fall away even more.

It’s about a half-hour to go before the open. SPY is trading down -0.65% to -0.80%, while TLT is unchanged.

If TLT makes a new daily high above 144.32, it’s a good sign we may have seen the bottom of that market.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Silver: No Squeeze In Sight

There are so many reasons why the silver squeeze is over; not the least of which is the constant bombardment of the supposed event in the financial press.

If the mainstream financial press is covering the topic (any topic) whatever the event, it’s over, irrelevant or an intentional miss-direction.

The little guy’s not going to put the big guys into a bind.

The big guys (the controlling interests) will just change the rules of the game as is being done with SLV.

Let’s move on.

Potential action in SLV is above. We’ve got hits on the right side of the chart indicating a potential trend has formed.

There’s already precedent for a trend change with the massive volume spike on February 1st.

Inverse fund ZSL (not advice, not a recommendation) is showing the same trend potential but in the opposite direction … up.

As always, anything can happen. For example, an earthquake (seismic activity picking up world-wide) could wipe out production at some major mine and affect the price.

The chart above, shows the current potential. A trend may have been formed. If SLV price posts a new daily low (below 24.93), we have additional confirmation.

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Silver Short Squeeze, Over

Massive volume in SLV, points to significant reversal.

Not since the week of May 13th, 2011 has there been higher volume.

The week prior in 2011, was the highest volume ever, for SLV at 1.1-Bilion shares.

Those two weeks culminated in a crash over -31% and were just after SLV reached its all-time high.

Total down-draft for the three weeks combined (the top and two weeks following) was nearly -34%.

Will it be any different now?

Probably not.

At this point, it’s important to re-state, this site is following principals and techniques set down by three market masters of the early 1900s; Livermore, Wyckoff and Loeb.

Markets do not change. Using the techniques outlined by those early masters are still applicable today.

Arguably, the father of technical analysis was Wyckoff.

The terms “accumulation, distribution, support and resistance” originated from him.

His technical publications had the largest subscriber base in the States at the time; larger than all other publications combined.

At one point he got so successful, his buy or sell recommendations were beginning to move the markets all on their own. The year was 1918.

Instead of stroking his ego on how ‘his recommendations’ were affecting the markets, he saw it as a disservice to his clients.

In May of 1919, he discontinued his newsletter publication ‘The Trend Letter’. It had become so popular, it was impossible to provide recommendations without those same tips moving the market.

What a contrast to today.

Those attempting garner forces (the little guy) to move the markets, such as silver, will find out soon enough who’s in control … and it’s not them.

It’s unlikely silver is going higher any time soon. There could be some upward spasms as the crowded trade exhausts itself; it’s likely we’ve seen the SLV highs for quite some time.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Silver on an Island

The silver hype couldn’t even last for a single day.

Price opened gap-higher on Monday and then steadily eroded to close lower; posting a reversal bar on massive volume.

The next day, yesterday, the trap is shut. Island gap reversal.

Way back in Livermore’s time, in his (fictionalized) biography, he says the big players can’t get in and out whenever they want.

Their positions are so large, entering and exiting would cause huge moves in the market. They need to have an “event” with massive volume so as to hide their actions (entering or exiting).

The pre-market update on Monday proposed the whole kabuki theater with GME, then SLV could have just been a ruse for big players to establish massive SLV (or futures) short positions; or just plain exit out entirely.

That idea doesn’t sound so far fetched now.

We’ll have to see if it’s true at the next commitment of trader’s report.

Either way, it’s not really important to dive into the minutiae. We can just look at the chart.

As Prechter likes to call it, massive volume signifies a “changing of hands”. Most likely from strong to weak (i.e. from professional to retail).

The significance probably invisible to the public, this may be the inflection point.

Now that SLV’s at a potential long term pivot, we could be at the cusp of a deflation impulse.

Commodities (like oil) along with real estate, one of the most illiquid of all markets, get crushed in a downturn.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

SLV Up 10%, Can it Hold?

The short answer is, probably not.

Is anyone looking at the technical condition? No, it’s all about ‘putting it to the man’.

In all of Wyckoff’s writings, he never once proposed the idea of taking the large controlling entities for a ride.

He was totally immersed in figuring out what those entities were trying to accomplish; then getting on the right side of the trade.

For all we know, the whole hedge fund blow-up, kabuki theater could have just been a sacrificial lamb (an inside job) targeting silver for a massive short opportunity.

How’s that for strategic thinking.

Right now, in the pre-market, SLV is right at new recovery highs.

The real question should be, ‘how long can the hype last?’

Can it finish the week at new highs and post a bearish divergence on the weekly MACD?

Price action itself will decide. What we do have, is risk being removed on the short side.

Inverse fund ZSL is down a stiff -21%. If there is a short, that’s the one to watch (not advice, not a recommendation).

It’s important to note, GLD is nowhere near a +10% move. It’s a non-confirmation on silver.

Separately, the overall markets are trading higher but appear to be under their prior session (daily) highs … indicating a short position in those markets is still viable.

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.