Market Big Picture (Edit: Including a Weird, Sponaneous Riff on Gold)
A big picture forward look from NFTRH160 (published on November 6th) that was unplanned, was triggered by the NDX/Gold chart and is intended for open minds:
But that is the reality; we however, are here for market management. The US leader, the Nasdaq 100, is actually a laggard to the SPX and Dow in the big picture [relative to its 1999 highs] since the bubble burst. NDX satisfied the 38% bear market Fib retrace in 2007 just before the 2008 crash. Now, it has impressively rebounded, looking for more. If NDX should break to new recovery highs, it will set its sights above 2600.
The companies in this index sell cool gizmos to the world. Many of them have Chinese labor screwing them together, customer service people in India answering customer concerns and as I type, I realize they are making the world a better place for one little newsletter writer. Several months ago I wondered if maybe Google and Apple - with their cash hoards - might be the new 'banks' of the 21st Century. In light of the European financial meltdown and the potential still lurking within many US financial institutions, I still wonder.
Technically NDX is okay, as post-bubble bear markets go. In the past there were a lot of comparisons of NDX to its post-bubble predecessor, Japan's Nikkei. I would attribute the very different post-bubble trends primarily to the US' ability to leverage its natural, and thereby financial, resources in a way that the relatively tiny Pacific island has not been able to do. How much more cement can Japan accommodate?
NDX in a bear market you say?
Yes, NDX in a bear market (looking more like the Nikkei, absent the effects of inflation) vs. the money alternative that has not been printed onDemand for the last decade. But while we often hear gold bugs proclaiming how much lower the SPX and Dow have to go in terms of gold, this chart gives my inner gold bug pause. You know I am susceptible to the call of big tech, after all. This chart ladies and gentlemen, is a perfect illustration of why I noted that beyond the current gold miner stance, my potential bullishness then extends out to the Emerging Markets and big US technology, in that order.
With people in the streets, the nation apparently now rejecting the lazy sloth and greed of the Greenspan Inflation onDemand era... with gold and silver rapidly entering the public mindset... with the Great Depression exhumed from history... generally, with the public now coming up to speed on what we have known since 2002 (well, what I have known; you may have gotten it sooner), and with quality, cash laden tech stocks now bled back down to levels in ratio to gold not seen since the mid-90's, I for one am ready to accept the potential for a coming era that sees quality equity selection being rewarded over the long-term.
Strategic emerging markets (like those frequented and analyzed by 'charter subscriber' Jonathan) and quality big tech that will serve those and other markets with the tools of progress are definitely on NFTRH's radar. So much so that if we are lucky enough to get one final washout in the financial markets and one final thrust upward in the precious metals, I could foresee the potential for a major alteration in NFTRH's plan. This plan might include relative bearishness in the precious metals and eventually their miners.
Dialing back to the here and now, nothing has changed. The above is a riff that sprung out of the NDX-Gold chart and I think it fits with the 'looking ahead' theme. I am uncomfortable with the way gold exploded during the Euro crisis last summer. I am uncomfortable with the 'channel buster up' that blew out the then current NFTRH gold analysis.
I do not think gold suffered a terminal blow off. Not yet. But we who are bullish on gold are part of a herd you know. And the herd has gotten bigger in the last year. This herd includes nations and their central banks. My friends and neighbors (and likely yours) have not yet considered this monetary relic. So all appears fine for now.
Gold has all kinds of upward potential if and when the final blow off arrives. Thousands of dollars an ounce. But that is crack pipe talk for 'players'. Gold is only a barometer to the financial times. The entire developed world is in pain and angst, and politically things are very tenuous. Wars are on a hair trigger as the US military industrial complex business grinds on as usual. Inflation's effects are everywhere as people fall further and further behind in the simple effort to live and support their families.
It is a great time for gold, just like in the 70's. Yet the point of this stream of consciousness is that just like with a bombed out stock, when bottom feeders start looking for news that can't get any worse and technical patterns that imply a bottom is in, I want this newsletter to be on the job over the biggest of pictures gauging the process.
Gold probably still needs some major upside blow off action. But this will not titillate us. We will be cold and calculating because these are the markets and the herd is never, but never right. Wow, okay thank you for the brain dump sir; can we now get back to the market? [NFTRH160 then reverts back to 'here and now' market analysis...]