At present, all eight BEGOS Markets are again within today’s respective Neutral Zones, and volatility is, in turn, light. Our “live” P/E of the S&P 500 (in fut’s-adj’d real-time) is below 40x (now 39.7x) for the first time since May; ‘course historically, this remains an extremely high level, as we’ve regularly said especially given risk-free three-month U.S. dough yielding 5.3% annualized. Whilst no material “fear” has yet to hit the S&P, there was a tinge of it yesterday as the MoneyFlow suggested an S&P drop of -1.0% vs. that of -0.7% for the Index itself; by Market Profiles, the Spoo’s most dominant overhead resistor is 4518, (price at present is 4458). Meanwhile for whirl-around Oil, price (87.26) is better than +7 points above its smooth valuation line (see Market Values). Included today for the Econ Baro are the revisions to Q2’s Productivity and Unit Labor Costs.
Mark
06 September 2023 – 09:02 Central Euro Time
Quiet is the state of the BEGOS Markets at present: all eight components are within today’s Neutral Zones, and volatility is light. Gold’s drive to an All-Time High has begun with a dive, both the yellow and silver metals well off last week’s settles; by Market Profiles, for Gold (currently 1951) we’ve resistance at 1964 and 1972, with support at 1945 and 1932; for Silver (currently 23.83), Profile resistance shows at 24.60 and 25.00, (with no notable support this low is the Profile); of course, both metals have just commenced weekly parabolic Long trends such that we do not anticipate much downside relative to pending upside. Today’s Econ Baro awaits August’s ISM(Svc) Index and July’s Trade Deficit. And late in the session comes the Fed’s Tan Tome.
05 September 2023 – 10:04 Central Euro Time
The second of the two-day session finds all eight BEGOS Markets in the red, and all (save for the Euro) at present below their respective Neutral Zones. Combining the two days, session volatility is moderate-to-robust, with both Silver and Copper having traced in excess of 100% of their EDTRs (see Market Ranges), Looking at Market Rhythms, on a 10-test swing basis our most consistent studies are Gold’s 2hr MoneyFlow, the Euro’s ongoing daily MoneyFlow, and Silver’s 8hr Parabolics; on a 24-test swing basis, our leader is the Bond’s 2hr Price Oscillator. For the primary BEGOS components, the best correlation is positive between the Euro and Gold. The Econ Baro looks to July’s Factory Orders.
04 September 2023 – 09:00 Central Euro Time
We start the week with a safe-haven BEGOS Markets’ bid: at present both the Swiss Franc and Gold are above their respective Neutral Zones for today; Oil is below same, and volatility is light. The Gold Update points to an All-Time High route given the fresh new weekly parabolic trend and the typical percentage gains that historically ensue. At Market Values, we’ve Oil nearly +6 points above its smooth valuation line. And at Market Trends, both the Euro and Swiss Franc find their “Baby Blues” of trend consistency struggling to get off the floor, the Dollar Index during July moving from the 99s to now the 104s. The Econ Baro awaits 8 incoming metrics as the week unfolds. StateSide bourses are closed for Labor Day; thus the BEGOS Markets are in a two-day session for Tuesday settlement, with trading halts late Monday (today).
The Gold Update: No. 720 – (02 September 2023) – “Gold and Silver Finally Flip! How High Might Be This Next Up Trip?”
The Gold Update by Mark Mead Baillie — 720th Edition — Monte-Carlo — 02 September 2023 (published each Saturday) — www.deMeadville.com
“Gold and Silver Finally Flip! How High Might Be This Next Up Trip?“
Thank goodness, THAT’S over.
“ ‘THAT’ being what, mmb? “
THAT, Squire, being the Short parabolic trend for both Gold and Silver having finally reached the end! For as last week herein penned:
“As to the ‘when’ for these two precious metals’ Short trends to end … it is plausible one if not both precious metals’ weekly trends can be Long in a week’s time. ‘Stay tuned to this channel for further developments…’“
Which as foretold by the Sibyl — here in the guise of the lovely Lady Fortuna — is exactly what came to pass as the week unfolded, Gold settling yesterday (Friday) at 1966 and Silver at 24.55. ‘Tis a beautiful thing, their new weekly parabolic Long trends each heralded by its rightmost encircled fresh dot in blue:
‘Course the key question from here is: “How high is high?” Notwithstanding last Spring’s structural resistance (for Gold in the 2000-2100 range and for Silver in her 25-27 range), let’s recall “average maximum” price follow-throughs. For Gold’s last 10 parabolic Long trends (dating back to September 2018), the average max upside upon Long trend confirmation is +11.1%: thus in that vacuum from today’s 1966 level, to reach such “perfect world” average would bring an All-Time Record High of 2184. Likewise for Sister Silver’s last 10 parabolic Long trends, (in her case dating back to December 2018), the average max upside (as anticipatively noted a week ago) is +19.6%. Such increase from today’s 24.55 price, would bring 29.36, a level not traded for Silver since 01 February 2021.
And for Silver, that’s still a far cry from her All-Time Record High of 49.82 on 25 April 2011, the Gold/Silver ratio on that day a mere 32.1x versus today’s 80.1x. The century-to-date average of that ratio is now 67.7x. Pricing Silver to that puts her at 29.04 … which is not far from the just-cited 29.39 potential upside follow-through per the new parabolic Long trend. ‘Tis one of those things that happily makes you go “Hmmm…”
“Hmmm…” (not necessarily happily) also applies to the state of the Economic Barometer. Hardly is it humming along, but neither is it sputtering to a stop. From this past week’s load of 16 incoming metrics, 8 showed period-over-period improvement, 7 were worse, and arguably the most important of all the data points — Core Personal Consumption Expenditures — again came in at +0.2% (an annualized rate of +2.4%) for the month of July. Such rate of this Federal Reserve-favoured inflation gauge means the Open Market Committee — some say — shan’t further raise their Banks’ Funds Rate for the balance of the year. On verra…
To look at the Econ Baro year-over-year, its net neutral state may argue that the Fed simply go to bed, i.e. “Everything’s great!” Dow Jones Newswires just went on record with August’s StateSide jobs report as “near perfect”. And as for equities, Bloomy concluded the week with “Stock Traders Get Back to Believing Everything is Just Perfect”. Perfection abounds. And why not? Oh to be sure, risk-free three-month U.S. “no debt ceiling dough” settled the week at an annualized rate of 5.268%, whereas the “all-to-risk” S&P 500’s yield is a paltry 1.507%. BUT: it doesn’t matter for neither do earnings, our “live” price/earnings ratio for the S&P finishing the week at 40.6x, not quite double the S&P’s 66-year lifetime median ’round 23x. (Best not to wreck everyone’s fun).
Regardless, here’s the Baro with the S&P 500 today at 4516, only -5.9% below its all-time closing high of 4797 from back on 03 January 2022:
So just as “The Sky’s the Limit!” for the S&P — clearly as ’twas in November 1980, August 1987, March 2000, October 2007, February 2020 and January 2022 (from which “corrections” then ranged from -25% to -58%) — ’tis no surprise that the mighty Index again tops our year-to-date standings of the BEGOS Markets with both Gold and Oil rounding out the podium, (albeit a distant second and third). Note Silver’s seriously lagging percentage performance; hence the aforementioned G/S ratio still historically high at 80.1x:
Too, it being month-end plus a day, ’tis time to go ’round the horn for all eight BEGOS Market components across these past 21 trading days (one month) incorporating their diagonal grey regression trendlines and the baby blue dot depictions of such trends’ day-to-day consistency. Notably therein is a most material move by Oil. Indeed as we twice tweeted (@deMeadvillePro) during the week, Oil initially en route to the 75-72 zone then defied its “Baby Blues” with a great gusher into the highest weekly close (86.05) since that ending last 07 November (then 88.96). As for Copper’s up gap, we can thank the price premium in rolling from the September to December cac:
As to Gold and several of the key precious metals’ equity offerings, let’s next look year-over-year at their respective percentage performance tracks. From the bottom up, note that only Newmont (NEM) by this time frame is in the red, -5% as its weathers costs associated with acquiring Oz-based Newcrest Mining. Then to the good we’ve Pan American Silver (PAAS) +9%, the Global X Silver Miners exchange-traded fund (SIL) +12%, Gold itself +14%, Agnico Eagle Mines (AEM) +17%, Franco-Nevada (FNV) +19%, and the VanEck Vectors Gold Miners exchange-traded fund (GDX) topping the stack at +22%, (although well off its May highs, as is the entirety of the bunch). But all ought benefit in anticipating higher metals’ prices near-to-medium term as the new weekly parabolic Long trends kick into gear:
Meanwhile per the past fortnight, Gold’s Market Profile below left depicts trading support in the 1945-1942 zone, whilst Sister Silver below right has slipped a pip below her most dominantly-traded price of 24.60. These of course shall wither away as higher levels come into play:
Toward closing, here’s our chart of the sedimentary Gold Structure by the month from a dozen years ago-to-date. Gold’s present All-Time High of 2089 was established on 07 August 2020 as the response to COVID shut down the world. Yet now that Gold has flipped to a brand-new weekly parabolic Long trend, as noted the typical average follow-through can well break the Triple Top into uncharted territory toward 2184. And when viewed by the rightmost monthly bars, it makes the nattering nabobs of Gold negativism appear nonsensical:
Heaven forbid your being a precious metals naybob…
…for that’s where you ought put your bob: into Gold and Silver!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter: @deMeadvillePro
01 September 2023 – 08:56 Central Euro Time
September starts with Copper the sole BEGOS Market at present above its Neutral Zone for today; the balance of the bunch are within same, and volatility is light-to-moderate, Copper having thus far traced 69% of its EDTR (see Market Ranges). Oil — for which we’ve been seeking near-term the mid-to-low 70s — has whirled ’round upward, its “Baby Blues” (see Market Trends) also having reversed course back higher, (albeit the 21-day LinReg trend itself still is negative): the Blues looked to lower price levels from 79.26 (16 August), however price since weakened to only 77.59: ’tis at present 83.79; the recent high from some three weeks ago is 84.89; dominant Market Profile support is now 80.00. The Econ Baro concludes its week with StateSide August Payrolls data and the ISM Index, plus July’s Construction Spending.
31 August 2023 – 08:37 Central Euro Time
We close out August with the Fed’s favoured inflation gauge: Core PCE for July; expectations are for +0.2% for the month, (however a +0.3% reading as reasoned in the current edition of the Gold Update wouldn’t overly surprise us … but ‘twould the markets). Specific to the Spoo, it settled yesterday a full +100 points above its Market Magnet, an extreme deviation by that metric; thus we still do not see fear in the S&P’s MoneyFlow; currently our best Spoo Market Rhythm for swing consistency is the 2hr parabolic study. Otherwise early on this morning, we’ve the Swiss Franc, Silver and Copper as the BEGOS Markets at present outside (all below) today’s Neutral Zones; session volatility remains light by this hour. For the Econ Baro, other measures today also include July’s Personal Income/Spending.
30 August 2023 – 09:07 Central Euro Time
The Bond, Silver and Copper are all at present below their respective Neutral Zones for today; none of the other BEGOS Markets are above same, and volatility is again light. Late in yesterday’s session, the cac volume for the Bond rolled from September into December, as is the like case today for Silver. The S&P 500 yesterday unwound a technically “textbook oversold” condition that had been in place through the prior 10 sessions; of course fundamentally with the “live” P/E at 43.2x, the Index remains in an extremely overbought state, especially given the higher risk-free interest rate environment. The Econ Baro looks to August’s ADP Employment data, July’s Pending Home Sales, and the first revision to Q2’s GDP.
29 August 2023 – 09:06 Central Euro Time
At present ’tis but the Bond which is outside (above) its Neutral Zone for today; overall BEGOS Markets’ volatility is light. We’ve recently anticipated Oil to drop from ’round the low 80s (currently 79.85) to the 75-72 area given the “Baby Blues” (see Market Trends) commencing what now has become better than an ongoing two-week decline: by Market Values, price is fairly in synch with its smooth valuation line as well as with its Market Magnet; by its Market Profile, Oil settled yesterday at 80, its most dominantly-traded level of the past fortnight. The Econ Baro gets its busy week going today with August’s Consumer Confidence.
28 August 2023 – 09:06 Central Euro Time
A fairly quiet start to the week for the BEGOS Markets; at present, only the Euro is outside (above) its Neutral Zone for today; session volatility is light, save for Copper which already has traced 70% of its EDTR by Market Ranges, (albeit price is back in its Neutral Zone after having traded higher); too, Copper’s cac volume is rolling from September into that for December. The Gold Update exemplifies Silver’s firm performance across the last week or so: both Gold and Silver are within a week’s expected trading range of flipping their respective weekly parabolic trends from Short to Long, should the near-term precious metals’ rally continue. Although no EconData is due for today, the Baro looks to 16 incoming metrics as the week unfolds, including this Thursday’s (31 August) Fed-Favoured Core PCE Index for July.
The Gold Update: No. 719 – (26 August 2023) – “Gold Grips a Bit, but Silver Rips!”
The Gold Update by Mark Mead Baillie — 719th Edition — Monte-Carlo — 26 August 2023 (published each Saturday) — www.deMeadville.com
“Gold Grips a Bit, but Silver Rips!“
This past week wherein Gold finally garnered a wee bit of grip, ’twas Sweet Sister Silver who showed how to rip! Whereas Gold settled yesterday (Friday) at 1943 for a +1.3% weekly gain, Silver settled at 24.285 for a reigning +6.8% weekly gain. Let us thus duly start with the white metal in revisiting a few phrases from recent of these missives as below dated:
- 15 July –> “How many times have we herein written ‘Don’t forget the Silver!‘”
- 12 August –> “…from the ‘Means Reversion Dept.’ to price Silver via the century-to-date mean [Gold/Silver] ratio of 67.7x puts it at 28.76, (i.e. +21% above today’s 22.75). Again: ‘Got Silver?’”
- 19 August –> “Silver’s ‘Baby Blues’ … are just starting to curl upward, whilst price sits just above major trading support (22.75) in the Profile … Can Sweet Sister Silver actually lead Gold? Absolutely!“
And so justifiably it came to pass this past week that Silver indeed did rip, and moreover, she did so before Gold itself at least sought some grip. In fact: all-in from Silver’s low of 22.265 on 15 August, it took but six trading days for price to touch 24.430, a low-to-high gain of +9.7%. Had you been impossibly lucky enough to have bought that low and sold that high for a gain of +2.165 points, your single contract gain (at $5k/pt) equated to $10,825 … or as a deep-pocketer had you instead bought 100 contracts, your six-day gain equated to $1,082,500 … (just in case you’re scoring at home). Visually, here are the respective cumulative percentage tracks (per net daily closes) for Silver and Gold from two weeks ago-to-date, wherein the latter still looking rather flat is saying “Gimmie more lift, baby!”
Significantly intrigued by Silver’s finally coming ’round, we warrant her being paired with Gold in displaying the weekly bars and parabolic trends for both precious metals from one year ago-to-date. In each case, such trend remains Short (per the declining red dots), but with prices knocking on their respective doors to flip Long:
Indeed with Silver less than one point away from flipping her trend from Short to Long, the question is begged: “How much farther does Silver then climb?” Answer: across Silver’s past 10 weekly parabolic Long trends (extending back into December 2018), the “median maximum” price gain from each Long confirmation at week’s-end until again flipping back to a Short trend is +13.2%, and such average max gain is +19.6%. Strictly in that vacuum, were Silver’s trend to flip Long in the ensuing week at 24.870, a match to that median max gain would bring 27.480 — and further to the average max gain — 29.040. As for duration, the average Long trend across those 10 prior cases has lasted for 11 weeks. A lot of statistics there, but the prudent trader/investor looks to both time as well as range in cash management.
“Which means that 90% are not very prudent, right mmb?“
So say various studies, Squire. Or as a dear futures mentor of ours from many years ago might say: “They all knew better than the market which is why they’re not around anymore.” In other words, investing as Smart Alec on a wing and a prayer won’t get you anywhere, (e.g. how’s that “live” 41.5x price/earnings ratio of the S&P 500 gonna work out for ya?). Scary remains the story there.
As to the “when” for these two precious metals’ Short trends to end: Gold is 32 points away from flipping to Long with the “Expected Weekly Trading Range” now 47 points; and Silver is 0.585 points away from same with an “EWTR” of 1.315 points. Thus it is plausible one if not both precious metals’ weekly trends can be Long in a week’s time. “Stay tuned to this channel for further developments…”
Meanwhile in briefly reviewing our “non-events” take from a week ago, ‘twould seem that (after all the FedMedia hype as was anticipated) both the Fed’s Holiday Camp and the BRICS’ Revamp had almost no sway on our primary BEGOS Markets: week-over-week, the Bond was +0.6%, the Euro -0.7%, Gold (as noted) +1.3%, Oil -1.7%, and the S&P 500 +0.8%. Add to that the quiet Economic Barometer producing just a mild thud, and the week on balance (save for that of Silver) was a dud. Here’s the Baro as Federal Reserve Chairman Powell keeps a tight grip on the money whilst BRICS’ arguably succumbed to its namesake in adding six bricks to its mix:
But let not too much summertime complacency enter your veins as next week’s incoming Econ Baro metrics shall bring both losses and gains. Wherein this past week was weathered just five economic data points for the Baro, the ensuing week brings 16 metrics, the key highlight being Thursday’s (31 August) release of July’s Fed-favoured Core Personal Consumption Expenditures Index, the consensus for which is an annualized pace of +2.4%, (i.e. +0.2% for the month). Yet, if you really want to get into the weeds, recall the recently reported/leading July Core Producer Price Index having registered +0.3%; moreover the Core PCE’s 12-month regression level also “suggests” +0.3%. Too much information perhaps, but should +0.3% be the number, we shan’t be too surprised whilst all around are “expecting” +0.2%.
Either way, one must deem Silver as the anticipated “surprise” of the past week. Per our tweet (@deMeadvillePro) on Thursday, Silver’s “Baby Blues” of trend consistency were well on the northerly move after pointing to their commencing a fresh up-curl in last week’s missive. Such is recalled below in the following two-panel graphic of the precious metals’ daily bars from three months ago-to-date with Gold at left and Silver at right. And specific to the latter, we’ve coloured in red Silver’s bar and dot from Friday a week ago, from which point she truly did go. Way to rip, Sister Silver!
In so “ripping”, the Gold/Silver ratio in a mere week fell from 84.1x to now 80.0x: such like week-over-week drop has happened but one other time this year, indeed just recently so from the first-to-second week of July. Thus our interpretation? Sister Silver is getting a long overdue bid!
Long overdue, too, to rise from their respective Market Profile basements were both Gold next on the left and Silver on the right. The volume-dominant supporters and resistors are as labeled:
So with Sister Silver having put in a semaine superbe, let’s wrap it here with something hardly superb. As you regular readers of The Gold Update know, we’ve become more and more skeptical these recent years of the FinMedia’s foundational grounding and market understanding, (i.e. in referring on more than one occasion to the once-mighty and revered Barron’s as having become a children’s writing pool). And to wit, we balked again at a headline yesterday from ever-lovin’ Bloomy. Ready? “Stock Rally Has a Ways to Go Before Americans Feel Rich Again”. Instantly, we had a John Patrick McEnroe moment: “You canNOT be SERious!” What rally is being cited? ‘Course having virtually vanished from essentially the entirety of bullish market musings is the “E” word (Earnings) — which themselves haven’t actually vanished — but are, on balance, unsupportive of the S&P 500’s present level (4406 and its ghastly-high aforementioned P/E of 41.5x).
In fact, let’s go all the way back to The Gold Update penned on 28 January with respect to the S&P: “The S&P is today priced at [then] 4071. Morgan Stanley already is well on the record of it reaching down this year to 3000. We anticipate sub-3000. The P/E reverting to its historical mean (22.4x) suggests — were there no growth in earnings — 2313.” Yet to be fair for Q2 Earnings Season, as you know S&P cap-weighted profits grew at a +6% pace; but the overall level (as just stated) remains Index unsupportive.
Regardless, from here with just over four months remaining in 2023, ‘twould be a terrific tumble: from today’s S&P 4406 level to 3000 = -32% with 87 trading days to go. Has the S&P ever fallen by -32% within 87 trading days? Of course it has: during 1987, 2002, 2008, and most recently in 2020. Shall it so do in the remainder of 2023? Until we see fear at the website’s MoneyFlow page, the answer is “No” and our sub-3000 notion we’d have to forego.
Still, let us also reprise that: “Marked-to-market, everybody’s a millionaire; market-to-reality, nobody’s worth squat.” Or translated for you WestPalmBeachers down there: shall you be out of stocks before it all goes wrong?
And better yet: be in Gold and Silver!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter: @deMeadvillePro
25 August 2023 – 09:02 Central Euro Time
We’ve the Euro at present below its Neutral Zone for today, whilst above same is Oil; otherwise, BEGOS Markets’ volatility is mostly light. Across the past eight trading days, Silver’s low-to-high run is +9.7%. By Market Rhythms on a 10-test swing basis, the Euro’s daily MoneyFlow study continues to top the stack, followed by the Yen’s (not officially a BEGOS component) 15mn Parabolics. Looking at Market Values, the Bond is some -4 points below its smooth valuation line, the Euro some -0.02 points “low”, and the Spoo -144 points low. The Spoo (4382) by its Market Profile shows its most dominant resistors at 4385 and 4420. The Econ Baro concludes its quiet week with UofM’s Revised Sentiment Survey for August. FedChair Powell speaks at Jackson Hole.
24 August 2023 – 09:07 Central Euro Time
‘Tis the metals in play thus far today, Gold at present above its Neutral Zone, whilst Silver and Copper are below same; the balance of the BEGOS Markets are quiet, and volatility is light. Silver has risen better than +6% net these past three days; more on Silver in this Saturday’s edition of The Gold Update. Oil finally has weakened such as to break its previous low (which was 78.95), reaching down yesterday to 77.62: this suggests a move sub-75 as the “Baby Blues” (see Market Trends) too continue their descent; further, Oil’s 21-day LinReg trend has now rotated to negative. Included in today’s metrics for the Econ Baro are July’s Durable Orders.
23 August 2023 – 09:02 Central Euro Time
The Bond, Metals Triumvirate and Spoo all are at present above their respective Neutral Zones for today; none of the other BEGOS Markets are below same, and volatility is mostly light, save for Silver which has already traced 60% of its EDTR (see Market Ranges). By Market Rhythms, heading the list of the 24-test swing basis (for 405 studies) is the long-time visibly-observed Spoo’s 15mn MACD, likely the most popular trading study going back better than 20 years from our days at AvidTrader. At Market Trends, Oil’s “Baby Blues” continue to descend; however, price has yet to break lower to our anticipated mid-to-low 70s range (currently 79.46). The Econ Baro awaits July’s New Home Sales.
22 August 2023 – 09:06 Central Euro Time
The Euro is the only BEGOS Market at present outside (above) its Neutral Zone for today; session volatility is light. As was previewed in The Gold Update, Silver yesterday took off, its +2.5% single-day gain ranking as 10th best year-to-date; and now in real-time, Silver’s “Baby Blues” (see Market Trends) have provisionally crossed above their -80% axis, confirmation of which at day’s end would suggest still higher price levels near-term; Silver’s favoured Market Rhythm at present is its 8hr Parabolics, (which triggered Long on 16 August from 22.660, price now 23.370). For the S&P 500, “fear” still has yet to appear as the MoneyFlow’s differential to the Index itself is gaining ground; nonetheless, the “live” (futs-adj’d) P/E of the S&P is a terribly expensive 45.8x. For the Econ Baro today we’ve July’s Existing Home Sales.
21 August 2023 – 09:18 Central Euro Time
The Bond starts its week at present below the Neutral Zone, whilst above same is that for Oil; volatility remains light-to moderate per this time of the session. The Gold Update looks to Gold’s low for the current weekly parabolic Short trend as either being in place or quite nearby in the 1901-1893 area (price currently is 1918); too, the Update looks to this week’s BRICS rendezvous as a “non-event” in terms of any material outcome. In looking at Market Rhythms with the most consistent returns of late (10-test swing basis), we still note the Euro’s daily MoneyFlow plus its 30mn MACD, the Yen’s 8hr Parabolics plus its 15mn MACD, and Oil’s 30mn Parabolics. ‘Tis a muted week for the Econ Baro, with nothing due today.
The Gold Update: No. 718 – (19 August 2023) – “Gold’s Bottom-Seeking Descent; BRICS Seeming a Non-Event”
The Gold Update by Mark Mead Baillie — 718th Edition — Monte-Carlo — 19 August 2023 (published each Saturday) — www.deMeadville.com
“Gold’s Bottom-Seeking Descent; BRICS Seeming a Non-Event“
Gold just completed its 10th down week of the last 15, “spot” settling yesterday (Friday) at 1890 and the far more actively-traded December contract at 1918. Regardless, where is the bottom?
Such bottom-seeking descent hasn’t actually been that dire: basis December from its 01 May settle of 2081 to today’s 1918 is a price decline -7.8% across those 76 trading days. Within that period, the yield on three-month money has increased from 5.000% to now 5.278% whilst the liquid StateSide money supply (“M2”) has shrunk from reaching $20.89T (per 02 June) to now $20.70T. Thus in turn, the Dollar Index has increased from 101.885 on 01 May to now 103.350, as “less is more”.
‘Course you long-time readers of The Gold Update well know that such conventional wisdom “resistors” are futile. For when Gold goes, it goes. Recall the six-month run from January 2010 through June 2010 wherein even as the Dollar Index rose some +10%, Gold in stride rose nearly +7%? Or with respect to interest rates when from 2004 through 2006 the Federal Reserve’s Funds Rate rose from 1.00% to 5.00%, Gold therein rising +59% (from 402 to 639)? So again now, with respect to Gold today: where is the bottom?
Let’s assess Gold’s weekly bars and parabolic trends from one year ago-to-date:
Our best sense is that Gold is near — if not at — its bottom for this red-dotted parabolic Short trend, (now 13 weeks in duration). Note the two green support lines for the 1901-1893 zone: 1901 is the trend’s overall low from the week ending 30 June; and 1893 is the oft-reliable mid-point of the 1975-1811 support structure established during those weeks ending 03 February through 03 March. Were that zone to go — to which we say “No!” — 1811 would then become ripe for consideration.
To be sure, the market — today 1918 — is never wrong; yet neither is Gold’s value — today 3719 — mathematically to Dollar debasement. And since Gold is overwhelmingly priced in Dollars over any other currency, let’s briefly consider some FinMedia bantered-upon tricks by the BRICS.
Thus with a tip-of-the-cap to our “Who Knows What to Believe Dept.” as Brazil, Russia, India, China and South Africa gather in the latter for the ensuing week’s meeting, speculation is significantly rife over a variety of outcomes. “Yet another new currency regime”, they say, (indeed a curious combining of the “5Rs”: Real, Rouble, Rupee, Renminbi, Rand). “The world’s new reserve currency”, they say. “And it’ll be pegged to Gold”, they say. “But it won’t be convertible to Gold”, they say. And the “they says” continue ad nauseum. For what ’tis all worth, (which perhaps is nothing), we deem the outcome of it all as a non-event, and further that ’tis (whatever ’tis is) already priced into the primary BEGOS Markets (Bond, Euro, Gold, Oil, S&P 500)
Still, we’re a bit bemused again by the speculation of pegging a new currency to Gold yet without convertibility thereto. Given Gold primarily is transacted in Dollars, then is the new currency not in that sense pegged to the Dollar? And given the Dollar itself is (as are all the fiats) based on nothing, a BRICS currency is but another money mix. It thus might well be based on cereal box of Trix. You can see where the logic in pricing falls apart.
Moreover, what would you pony up to buy a “5R”? If the BRICSters desire creating a new currency, great: go for it. We’ve had ’em all though history, some notables being various Dinars, Kwanza , Pengo, various Pesos, notorious Reichsmarks, et alia. Remember too 97’s Asian Contagion and 98’s Russian Debt Crisis? So what’s another pile of bad actors’ BRICS anyway, eh? “Got Gold?” To reprise the late, great Richard Russell: “Gold’ll be the last man standing.”
In fact, let’s see how Gold has been standing across the past dozen years. As vastly undervalued as the yellow metal remains, the bent of price’s daily settles from what was then (on 22 August 2011) Gold’s All-Time Closing High of 1900 to today has at least regained resiliency even as StateSide “M2” has since more than doubled!
“But mmb, you did write back in 2011 that Gold was too high…“
Absolutely correct, Squire. But run the regression vis-à-vis Dollar debasement across the last four decades and — even accounting for Gold’s own supply increase — valuation today is the aforementioned 3719. Just in case you’re scoring at home. “Tick, tick, tick goes the clock, clock, clock…” Do not miss out:
Turning to the Economic Barometer, its week produced quite an up-streak. Of the 14 incoming metrics, 10 improved period-over-period, albeit the National Association of Home Builders portends August’s Housing Starts and Building Permits shall show slowing (when next reported on 19 September). But quite curious amongst the data was the NY State Empire Index tanking from July’s +1.1 reading to -19.0 for August, whilst the Philly Fed Index was rising from -13.5 to +12.0(!) Is that indicative of a mass exodus from New York City to so-called “Little New York”? Stay tuned…
Meanwhile as to this current Econ Baro spike, to borrow from an old Memorex advert of 40-50 years ago: “Is it real? Or is it inflated?” This past 27 July we had the first peek at Q2 Gross Domestic Product annualized growth, which at +4.6% — less the 2.2% “chain deflator” — netted a real GDP pace of +2.4%. In other words for you WestPalmBeachers down there, essentially half of the economic growth seems solely due to inflated numbers: “Yeah, well we sold less product this year but we made more money ’cause we raised prices!” Let’s see how long that lasts. Here’s the Baro:
Therein the red line is of course the S&P 500, this year’s high (4607 on 27 July) we’re ruminating as it for all of 2023. Yes, our “live” price/earnings ratio for the S&P remains unrealistically high at 44.3x (basically double the Index’s lifetime P/E mean).
That is even more significant given the overall poor quality of Q2 Earnings Season having just ended. Doubtless you shan’t find the following on your favoured FinTv station: because we actually do the math, for the 1,867 companies collected, only 49% bettered their bottom lines from Q2 a year ago. Ex-COVID quarters, that is the worst year-over-year comparative performance since Q3 of 2015. (‘Course 65% of earnings “beat estimates”, the brokering tool to suck in the ignorant). And whilst 60% had revenue increases, this bottom-line decline means ‘tis getting more costly to run businesses. “Uh-oh, say it ain’t so!” See? ‘Twasn’t on your FinTV. From the website, here’s Q2 visually:
Visually for Gold we next go to our two-panel display of price from three months ago-to-date on the left and 10-day Market Profile on the right. And as much as we hate being right when assessing Gold’s descending baby blue dots of trend consistency, again we say “Follow the blues instead of the news, else lose your shoes.” (To wit, too, last week’s leading tweets [@deMeadvillePro] on Oil). As for Gold, price again lies near the base of the Profile:
Then we’ve Silver — whose ratio from Gold is a value-grabbing 84.1x (this century’s mean being 67.7x) — and for whom the like display is looking a bit better. Silver’s “Baby Blues” (below left) are just starting to curl upward, whilst price sits just above major trading support (22.75) in the Profile (below right). Can Sweet Sister Silver actually lead Gold? Absolutely! (Your homework assignment is to review October-November 2022). Whoo-hooo! Here’s the current graphic:
Let’s wrap with a look at the stack:
The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3719
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
2023’s High: 2085 (04 May)
Gold’s All-Time Closing High: 2075 (06 August 2020)
The Weekly Parabolic Price to flip Long: 1982
10-Session “volume-weighted” average price magnet: 1945
Trading Resistance: 1923 / 1935 / 1950 / 1960 / 1969
Gold Currently: 1918, (expected daily trading range [“EDTR”]: 18 points)
10-Session directional range: down to 1914 (from 1982) = -68 points or -3.4%
Trading Support: (none by the Profile)
The Gateway to 2000: 1900+
The 300-Day Moving Average: 1851 and rising
2023’s Low: 1811 (28 February)
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
On Maneuvers: 1750-1579
The Floor: 1579-1466
Le Sous-sol: Sub-1466
The Support Shelf: 1454-1434
Base Camp: 1377
The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland: The Whiny 1290s
The Box: 1280-1240
To sum, the two big (arguably non-) events in this week next spent are of course the FinMedia BRICS-speculative narratives plus the Kansas City Fed’s annually-sponsored summer camp at magnificent Jackson Hole, to a degree on par with The Who’s (indeed Krazy Keith Moon’s) 
“Tommy’s Holiday Camp” –[1969].
So who’s camping your monetary value? Hopefully YOU with Gold and Silver too!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter: @deMeadvillePro
18 August 2023 – 09:57 Central Euro Time
The Bond is at present above today’s Neutral Zone; the Swiss Franc is below same, and volatility is again light-to-moderate for the BEGOS Markets. Per our S&P MoneyFlow page, fear has yet to be exhibited during this recent selloff, (which is why the MoneyFlow line is rising relative to the Index itself); in fact near-term, the S&P 500 is now a bit “textbook oversold” and the Spoo (in real-time) is -184 points below its smooth valuation line (see Market Values). By the same measure for the other primary BEGOS Components, the Bond shows as -6.5 points “low”, the Euro as -0.27 points “low”, Gold as -44 points “low”, and Oil as +3.8 points “high”. Today is the final day of Q2 Earnings Season.
17 August 2023 – 09:15 Central Euro Time
The Bond is at present below its Neutral Zone for today; both Silver and Copper are above same, and volatility is light-to-moderate. Oil confirmed its “Baby Blues” (see Market Trends) as dropping below their +80% axis; as tweeted (@deMeadvillePro) yesterday, typical downside price follow-through would suggest we see the 74s, 73s, 72s near-term; (note that cac volume is beginning to roll from September into that for October; both cacs are currently in the 79s). For the S&P 500, the recent selling has been light vis-à-vis MoneyFlow, even as earnings have hardly been impressive. The Econ Baro wraps its week today with metrics including August’s Philly Fed Index and July’s Leading (i.e. “lagging”) Indicators.
16 August 2023 – 09:08 Central Euro Time
Outside at present of their Neutral Zones for today are both the Bond (above) and Oil (below); the balance of the BEGOS Markets are within same, and volatility is again light. At Market Trends, Oil’s “Baby Blues” have provisionally dropped below their key +80% axis, which if confirmed by day’s end portends still lower price levels near-term; even as Oil declined yesterday, price remains (in real-time) +4.60 points above its smooth valuation line, (see Market Values). The Spoo yesterday reached our initial downside target of 4455. The Econ Baro today looks to July’s Housing Starts/Permits and IndProd/CapUtil. Late in the session we’ve the FOMC’s Minutes from their 25-26 July meeting.
15 August 2023 – 09:14 Central Euro Time
Following a below-average volume day for the BEGOS Markets, quiet thus far today is again the watchword, (albeit a lot of EconData waits in the wings); at present, the Bond is below its Neutral Zone for today, whilst the Euro is above same; session volatility is light. We continue to mind Oil’s “Baby Blues” (see Market Ranges): in real-time they’ve kinked lower, although are still above the key +80% axis; at Market Values, Oil is +6.96 points above its smooth valuation line; presently priced at 82.73, Oil’s most dominant Market Profile resistor is just above here at 82.80; (the recent high is 84.89). For the Econ Baro we’ve August’s NY State and NAHB Housing Indices, July’s Retail Sales and Ex/Im Prices, and June’s Business Inventories.
14 August 2023 – 09:03 Central Euro Time
Copper and Oil commence the week at present below today’s Neutral Zones; the balance of BEGOS Markets are within same, and volatility is mostly light. The Gold Update emphasizes that ’tis not just the yellow metal that’s been in decline, but — save for Oil — all the BEGOS components have been falling as the Dollar firms, notably so their “Baby Blues” (see Market Trends). Specific to Oil, again mind its “Baby Blues” to crack below their +80% axis as this week unfolds, (which in turn would suggest lower levels for price). This is the final week of Q2 Earnings Season; and whilst the Econ Baro is quiet today, it awaits 14 incoming metrics tomorrow through Thursday.
The Gold Update: No. 717 – (12 August 2023) – “Ain’t Just Gold Been Headin’ Down…”
The Gold Update by Mark Mead Baillie — 717th Edition — Monte-Carlo — 12 August 2023 (published each Saturday) — www.deMeadville.com
“Ain’t Just Gold Been Headin’ Down…“
Before we graphically elaborate on this week’s double-entrendre Texas-speak title, let’s be up front as regards a mis-guided inference from a week ago. Therein we wrote with respect to Fitch’s downgrading StateSide credit from AAA to AA+ that: “…it remains to be seen if raters Moody’s and S&P follow Fitch…” to which a charter reader of The Gold Update pointed out S&P already having dropped their rating to “AA+” 12 years ago. Given we command accuracy in all that leaves these fingertips, this correction is obligatorily warranted.
Now in transiting from Kings’s English to this missive’s title drawl of “Ain’t Just Gold Been Headin’ Down…“, we begin with the following graphic normally reserved for our month-end missives. ‘Tis our ’round-the-horn view of all eight BEGOS Markets across the past 21 trading days, (i.e. from one month ago-to-date). The day-to-day consistency of the grey diagonal trendlines is denoted by the baby blue dots:
And quite clearly — save for Oil remaining bold even as the Dollar maintains a currency toehold — hardly is it just Gold that’s been getting sold; rather ’tis the balance of bunch, (again ‘cept for Black Gold).
Further, the firming Dollar suggests the Federal Reserve’s foot is “expected” to stay on the interest rate pedal, (or again as a long-time StateSide colleague would quip, the Buck continues to “lead the ugly dog contest”).
Indeed wholesale inflation — which for you WestPalmBeachers down there leads retail inflation — just recorded for July finds the Core Producer Price Index having made its largest monthly pace leap (+0.4% from June’s -0.1% to now +0.3%) since that for March 2022. Such suggests the Fed’s money noose looks to remain tight rather than return to loose. Recall too the Fed-favoured Core Price Consumption Expenditures Index through June still ran a bit in excess of the Fed’s 2% annualized inflation rate; the July PCE reading is scheduled for 31 August with the Open Market Committee’s next Policy Statement not due until 20 September. And a lot can happen (understatement) between now and then.
Within the debiting deluge we turn to Gold’s weekly bars and parabolic trends from a year ago-to-date. And even initially inclusive from two weeks ago of +40 points of December futures premium over spot, Gold has been unable to break above the red-dotted Short trend, price settling out the week yesterday (Friday) at 1946, (still +33 points over spot’s 1913 level). To break said trend in the ensuing week requires a rise of at least +43 points (from 1946 up through 1989), which technically is “in range” given Gold’s “expected weekly trading range” is now 50 points. Specific to statistics, century-to-date Gold is now in its 48th weekly Short trend, the average duration from 2001-to-date being 11 weeks, this current stint now 12 weeks. Thus if stretching for positives, one might opine that the current trend is getting a bit “short in the tooth, partner”…
Meanwhile, still “short” on establishing any kind of trend these days is the Economic Barometer, this past week’s 10 incoming metrics finding six having improved — and thus four having not — period-over-period. “But it’s an uptrend!”, they say. “No it’s a downtrend!”, they say. To be sure, the yo-yoing chop-chop continues it way:
‘Course, within the overall FinMedia rah-rah of inflation nearing the Fed’s 2% target such that another “pause” is in the offing, we’re nonetheless told that borrowing money to purchase real estate is nearing a cost of 7%. Why so high if inflation is so low? Seems quite the large income spread for the bank that pays some 3% to collect some 7%. Yet as Q2 Earnings Season drifts towards its close, in glancing at banks’ earnings, about 40% of those reporting had lower bottom lines than in Q2 a year ago. The good news is: at least that sudden spate of bank illiquidity during this past March quickly stopped, right? “Whew! That was close!”
As for the S&P 500, at least it finally is correcting, albeit thus far to a rather wee extent. From the year’s high of (4607) to yesterday’s low (4444) spans just -3.5%. And given our initial S&P Futures target from that top is 4455, having since reached down to as low as 4459, we’re nearly there, albeit as herein previously penned: “Other in-house measures suggest the 4300s.” As well, our “live” price/earnings ratio for the S&P 500 — which recently was nearly 60x — has come off, such reading now still an otherwise ridiculously-high 44.8x given annualized risk-free dough pays 5.265% at the three-month T-Bill window; (the yield on the “all-to-risk” S&P is now 1.526%). Still, we believe reversion to the mean will out: it always does. (Anyone remember the March 2009 month-end P/E of the S&P? 13.3x). Too as we tweeted (@deMeadvillePro) this past week, mind the website’s MoneyFlow page, its leading measures of late now weaker than the decline in the S&P itself.
“Also don’t forget that we’re getting close to September, mmb…“
A little seasonal spice there from our Squire. Indeed, September into October have on occasion been torrid times for stocks. Certainly the stars are well-aligned for fallout this time. But then again, they’ve been well-aligned as such since the days of COVID came to be with nary a material pullback to see.
In the interim (short or long as it may be) what we can below see are the 10-day Market Profiles for Gold on the left and for Silver on the right. Therein we’ve present prices (Gold 1946 and Silver 22.75) buried at their respective bases. Moreover as noted in Gold’s aforeshown weekly bars, the Gold/Silver ratio is now 85.5x, the highest week-ending level since that on 23 June (86.0x). Again from the “Means Reversion Dept.” to price Silver via the century-to-date mean ratio of 67.7x puts it at 28.76, (i.e. +21% above today’s 22.75). Again: “Got Silver?”
So as these “Lazy-Hazy-Crazy Days of Summer” –[Nat King Cole, ’63] now work through the so-called “Dog Days of August” let us not be too remiss to “check out”. For the data drums continue with the ensuing week’s slew of 14 incoming metrics for the Econ Baro, including the Conference Board’s lagging “Leading Indicators” for July. Uptrend? Downtrend? The consensus leans to the latter.
Thus what’s on your platter? Hopefully Gold!
Oh nice touch there, Squire, on the Sam Pepys’ Silver plate!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter: @deMeadvillePro
11 August 2023 – 09:08 Central Euro Time
Early on we’ve all eight BEGOS Markets at present within today’s Neutral Zones; volatility is very light. By Market Trends, every component (save for Oil) is now in a decided downtrend, evidence of the Dollar’s strength during the past few weeks. Specific to the Spoo as regards our anticipated run down to at least 4455, yesterday’s low came relatively near at 4474, (considering having come down from our first such musings at 4634 some two weeks ago); Market Profile support shows at 4487, with the first notable resistor at 4514. The Econ Baro wraps its week with the UofM Sentiment Survey for August, plus July’s wholesale inflation read via the PPI.
10 August 2023 – 09:10 Central Euro Time
The Spoo is the sole BEGOS Market at present outside (above) its respective Neutral Zone for today; however by Market Trends, the Spoo’s 21-day LinReg trend has just rotated to negative (as tweeted earlier this morning @deMeadvillePro); we still seek 4454 to trade near-term, (price currently 4508). Session volatility is quite light ahead of retail inflation data. By Market Rhythms on a 10-test swing basis, the Euro’s daily MoneyFlow study remains our most consistent, whilst on a 24-test swing basis ’tis Oil’s 30mn. MoneyFlow. As noted, metrics due today for the Econ Baro include July’s CPI and the months Treasury Budget.
09 August 2023 – 09:16 Central Euro Time
Both Copper and the Spoo are at present above their Neutral Zones for today; none of the other BEGOS Markets are below same, and volatility is light, (Copper the sole components having traced in excess of 50% of its EDTR by Market Ranges). At Market Trends, save for Oil, the seven other markets all find their “Baby Blues” of regression trend consistency in decline, even as the Spoo itself seeks a relief rally off of yesterday’s low (4482, now 4530); by its Market Profile, the Spoo shows trading resistance initially at 4537. Meanwhile, the P/E of the S&P has notably come off from the mid-50s to the mid-40s (still “way too high”) in large part from AMZN (3.7% of the S&P 500) earnings improvement knocking its own P/E down from 300+ to just over 100. With much of Q2 Earnings Season in the books, 57% of the reporting S&P 500 constituents have improved their bottom lines over a year ago.
08 August 2023 – 09:11 Central Euro Time
The Bond is at present above its Neutral Zone for today; below same are Copper, Oil and the Spoo; volatility is again light-to-moderate. Whilst the S&P yesterday rose +0.9%, its MoneyFlow was actually negative, (see S&P: sub-menu MoneyFlow); specific to the Spoo (4525), we continue to seek the 4455 level (i.e. the mid-point of the initial 4498-4411 underlying support structure). At Market Values, we note two excessive readings: Oil is some +7 points above its smooth valuation line, whilst the Bond is some -6 points below same. For June metrics, the Econ Baro awaits the Trade Deficit and Wholesale Inventories.
07 August 2023 – 09:04 Central Euro Time
The Spoo is the sole BEGOS Market at present above its Neutral Zone for today; below same are the Bond, Euro, Swiss Franc and Silver; volatility is light-to-moderate. The Gold Update — whilst depicting price nearing its “flip-to-Long” level by the weekly bars — is nonetheless duly cited as being in sync with the other primary BEGOS components, which save for Oil, are in near-term decline; too we review the S&P’s P/E as posied to revert to its mean, which from the current price level (4478) would be a “correction” of -27% toward the 3200s. The Econ appears starts its week late in the session with June’s Consumer Credit.
The Gold Update: No. 716 – (05 August 2023) – “Gold is Always AAA; the USA? uhhhhh….”
The Gold Update by Mark Mead Baillie — 716th Edition — Monte-Carlo — 05 August 2023 (published each Saturday) — www.deMeadville.com
“Gold is Always AAA; the USA? uhhhhh….“
We’ll get underway with our title’s “uhhhh….”
To which you wily readers weren’t surprised a wit this past Tuesday upon “Forever First Fitch” downgrading the credit rating of the dear ol’ USA from AAA to AA+. For as herein penned 10 weeks ago (on 27 May): “Rating agency Fitch (which always figures to be first) is said to be ‘considering’ a downgrade of its StateSide credit rating.”
‘Course in classic Rodney Dangerfield empathy, Fitch initially “got no respect”, the S&P 500 back then blowing off any threat of a StateSide downgrade by instead rising +9.6% right through this past Tuesday. But late that day suddenly appeared the actual downgrade and the S&P Futures immediately lopped off -26 points (basically a whole day’s range of S&P Index trading) in just two minutes. Further on Wednesday, Fitch too cut Fannie and Freddie. “Oh no, say it ain’t so!”
Either way, Fitch justified the credit rating cut given an “erosion of governance”, toward which the Secretary of the Treasury took umbrage, Old Yeller disparaging the downgrade as both ‘‘puzzling” and moreover “unwarranted”. Still at long last, “It all going wrong” may be more materially underway. Duly noted however (for the present) it remains to be seen if raters Moody’s and S&P follow Fitch (as on occasion is their wont). We’ll wax a bit further on the state of the stock market, but next let’s go to our title’s “AAA” for Gold!
Now as we cautioned a week ago, Gold’s COMEX contract volume has since rolled from August into December as is the norm at this time of year. Yet ever so noticeable this time ’round was the +40 points of (already eroding) premium of December over August (for the storage cost rationale we’ve previously detailed), the older contract going out as usual essentially at “spot”.
Thus in charting Gold’s “continuous contract”, price has the appearance of having gained +19 points (+1.0%) by the weekly bars, whereas in reality price instead dropped -22 points (-1.1%) settling yesterday (Friday) at 1943 vs. December’s 1978. Regardless, one might deem that 35-point difference as “noise” given Gold’s “expected weekly trading range” is now 52 points.
Still, Smart Alec may be tempted to Short the futures at 1978 on the vapid assumption that Gold shan’t go anywhere these next several months such as to collect 35 points of ShortSide profit (which at $100/pt/cac on 100 contracts would net Alec a profit of $350k). Our view, ‘natch, is that Gold shall go the other way (i.e. up) and ’twill be Alec that shan’t have gone anywhere but down, (let alone be around anymore). But the weekly bars certainly shall be. Here they are from one year ago-to-date, with the “spot” change as also noted:
And even as you WestPalmBeachers down there can figure, with Gold now (1978) just 18 points below the ensuing week’s flip-to-long level (1996), that 52-point weekly range expectation can easily get us there. Yet, ’tis critical that we be fair: through the past trading month (21 days), both Gold and the S&P 500 have been in positive directional correlation (i.e. moving both up and down together) as too have been both the Bond and the Euro; indeed Oil is the only primary BEGOS Market (Bond / Euro / Gold / Oil / S&P) that has wandered up-and-away from that bunch. Still, such notion puts us in mind of 2008’s “Black Swan” when all five primary BEGOS components simultaneously suffered (the least so the Bond and Gold). The point is: if the S&P has put in its high for this year (4607), as it continues to tumble, shall Gold so ride astride, or ideally move up against the tide? We think broadly the latter will out, but for the present, here are the percentage tracks of Gold and the S&P 500 from one month ago-to-date:
As to the StateSide economy, this past week’s set of 13 incoming metrics for the Economic Barometer was nearly a replay of the week prior. Six metrics improved, six worsened, and one was “unch”. Thus the Baro looks stuck in a crunch:
And no, Pinocchio, the Baro does not lie, albeit we oft wonder about the jobs data. Wednesday’s ADP Employment report for the rate of job growth in July declined by -29% (from June’s 455k to 324k) whereas come Friday, Labor’s Payrolls rate increased by +1% (from June’s 185k to 187k). Again as we oft quip, it depends upon who’s crunching what. Too for June, the Factory Orders rate did well (from +0.4% to +2.3%) … but the rate of Construction Spending fell (from +1.0% to +0.5%).
And now just beginning to fall is the stock market. As we tweeted (@deMeadvillePro) this past Wednesday: “Following a streak of 41 consecutive trading sessions as “textbook overbought”, the S&P finally is coming off a bit. (The record across the past 44 years is 59 days). Seeking initially Spoo 4455 on this downleg.” (The “Spoo” is the long-beloved nickname for the S&P 500 futures contract). And ’tis well on its way toward the noted level from the past week’s high (4635), having settled yesterday at 4498. Other in-house measures suggest the 4300s. And then more broadly there’s this:
“Ahh, the P/E’s ‘inevitable’ (as you would say) reversion to the mean, eh mmb?“
Spot-on steady you are, Squire. Since instituting the honestly-calculated “live” price/earnings ratio of the S&P 500 a decade ago, you clearly can see the P/E (green) always reverts to its evolving average (red). Let’s too be honest about the “E”: thus far in Q2 Earnings Season, some 80% of S&P 500 constituents have reported, their combined capitalization-weighted EPS increase from a year ago being +6%, a respectable gain fairly in line with the rate of inflation (of which the stock market is a hedge). The problem remains that stock prices collectively indexed per the S&P 500 — vis-à-vis earnings — are terrifically expensive, especially given the positive interest rate environment, (such extreme risk variance upon which herein we’ve gone on ad nauseam).
Nevertheless with respect to the above P/E graphic, let’s do the foreboding math (a rarity in financial management these days). The “live” P/E today is 54.9x, varying vastly from your stockbroker parroting that “it’s twenty-something”. The evolving average is 40.3x. Thus to bring the “P” in line with the “E”: the reversion calls for an S&P 500 price “correction” from today’s 4478 down to 3290, (i.e. -27%). As well — rightly or wrongly — we’d written earlier in the year for the S&P perchance to reach sub-3000; or as our initial reader (one J.G.S.) from the inception of The Gold Update quipped away back in 2009: “There’s always the overshoot”. And by the above graphic, indeed there regularly is negative overshoot down through the red line.
Further we again remind: had COVID never occurred such that the money supply had never ballooned, the top of the S&P 500’s 50-year regression channel today would be 2800. Isn’t math wonderful?
As for the usually “rah-rah for ratings” FinMedia, we credit Bloomy with having come ’round to reality a bit, their headlining this past Tuesday that “Stocks pull back from July rally on weak earnings”, albeit we did ask ourselves for the bazillionth time “They’re just figuring this out now?” ‘Tis why we maintain the Earnings Season page at the website, which deep into Q2 results shows 50% of some 1,400 reporting companies having beaten their bottom lines from a year ago … which means 50% have not so done, (just in case you’re scoring at home).
Let’s next move on to assess Gold’s scoring via the following two-panel graphic of the daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. (Note: both panels are fully in December contract pricing; to view the effect of the aforementioned 40-point premium gap, please see the website’s page for either “Gold” or for “Market Trends”). Either way, yesterday Gold was well in play as you can see by its rightmost daily bar, even as the baby blue dots of regression trend consistency continue to descend. As for the Profile, the most dominantly-traded price in December terms for the past fortnight is that 1972 supporter, the overhead resistors as also labeled. And yes, Virginia, by the December contract, Gold in the past two weeks has traded to as high as 2022, just 67 points below the 2089 All-Time High from basically three years ago to the day (07 August 2020):
The like setup is much the same for Silver, her declining “Baby Blues” (at left) nearly identical to those for Gold; and as for her Profile support (at right), Sweet Sister Silver is sitting right on it at 23.70:
Peering into next week, the more generic (i.e. less Fed-favoured) July inflation data takes center stage. And by consensus at the retail CPI level, the headline number is again expected to be +0.2% with the core rising to +0.3%; and at the wholesale PPI level, both the headline and core numbers are expected to increase from June’s +0.1% to +0.2%. In other words: “expectations” are that inflation shall not have slowed but instead picked up during July. And stocks still are way too high. And the Econ Baro is hinting goodbye. And the StateSide credit rating has gone awry. To quote the late, likeable sports broadcaster Dick Enberg: “Oh my!”
And thus the bottom line for today:
Don’t become “fitched to be tied” like the USA; go with AAA Gold all the way!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter: @deMeadvillePro
04 August 2023 – 09:05 Central Euro Time
Silver is at present below today’s Neutral Zone; above same is the Spoo, and volatility is mostly light. By Market Rhythms, on a 10-test swing basis the Euro’s daily MoneyFlow study tops our list for consistency, whilst on a 24-test swing basis Copper is ruling the roost with its 30mn MACD, 1hr Parabolics, and 15mn Price Oscillator; (see too our Market Rhythms pages for the best performers with given profit targets). We’re minding Oil for a move lower as the 82 level these last few days seems a sticking point: Oil’s “Baby Blues” (see Market Trends) can give us the cue. StateSide ’tis July Payrolls for the Econ Baro.
03 August 2023 – 09:25 Central Euro Time
The Bond, Swiss Franc, Silver, Oil, Spoo are all at present below their Neutral Zones for today; none of the other BEGOS Markets are above same, and volatility is moderate-to-robust, the Bond notably having already traded 112% of its EDTR (see Market Ranges); the latter by Market Values is more than -8 points below its smooth valuation line, whilst the Spoo finally has returned to same for the first time since 05 May. By Market Trends, the Spoo has confirmed its “Baby Blues” dropping below their key -80% level; thus still lower price levels are expected near-term; as noted we’re seeking the 4455 level. The S&P yesterday fully unwound its “textbook overbought” condition following that run of 41 consecutive trading days. In addition to Q2’s Productivity and Unit Labor Costs, the Econ Baro looks to July’s ISM(Svc) Index and June’s Factory Orders.
02 August 2023 – 09:19 Central Euro Time
The Spoo gapped -18 points lower in concert with Fitch downgrading (as they’d been anticipating to do) the StateSide credit rating from AAA to AA+; (this occurred whilst the Spoo was in its usual one-hour closure from 21:00-22:00 GMT); the Spoo at present is below its Neutral Zone for today, as is Copper; the other BEGOS Markets are within same, and volatility is light-to-moderate. At Market Trends, the Spoo’s “Baby Blues” have preliminarily dropped below their +80% level, indicative of lower prices near-term: this last occurred on 27 June, however the downside follow-through was at best minimal, (the exception rather than the rule); we continue initially to look toward the mid-point of prior Spoo structural support ’round 4455, (current price 4575). For the Econ Baro today we’ve July’s ADP Employment data; (the first read of Q2’s Productivity and Unit Labor Costs is scheduled for tomorrow, 03 August).
01 August 2023 – 09:09 Central Euro Time
Each component of the BEGOS Markets’ metals’ triumvirate is at present below its respective Neutral Zone for today; the balance of the BEGOS bunch are within same, and volatility is mostly light. In real-time by Market Values, Oil is 8.92 points above its smooth valuation line, whilst the Bond is nearly -5 points below same. The S&P 500 confirmed its 40th consecutive trading day as “textbook overbought”; however by our MoneyFlow page, the upside thrust lacks puff. By the Spoo’s Market Profile, the most dominant supporters are 4605, followed by the 4588-4584 zone. The Econ Baro awaits July’s ISM(Mfg) Index and June’s Construction Spending.
31 July 2023 – 09:18 Central Euro Time
Save for the Euro and Swiss Franc, the balance of the BEGOS Markets are in the red, the Bond and Gold both at present below their respective Neutral Zones for today; volatility is light-to-moderate. The Gold Update emphasizes the +40-point price contango as cac volume rolls from August into December; currently priced at 1993, the yellow metal’s weekly parabolic trend would flip to Long should 2005 be eclipsed this week. The S&P 500 enters its 40th consecutive trading day as “textbook overbought” making it the 10th longest such streak across the past 44 calendar years, (the record is 59 days); the “live” (futs-adj’d) P/E of the S&P is 58.5x. Due for the econ Baro is July’s Chi PMI.
The Gold Update: No. 715 – (29 July 2023) – “Gold Behaving; Stocks Still Raving!”
The Gold Update by Mark Mead Baillie — 715th Edition — Monte-Carlo — 29 July 2023 (published each Saturday) — www.deMeadville.com
“Gold Behaving; Stocks Still Raving!“
Let’s start with this, courtesy of the “It’s Not About Us Dept.”
A week ago we herein thoroughly vetted the state of these Big Three eventualities: Gold’s stop, Fed’s pop, S&P’s flop.
Thus in the spirit of the late, great Meatloaf: ““Two Out of Three Ain’t Bad“–[1977] here’s a swift three-bullet update:
- As penned for Gold: “…we can thus see the 1940s-to-1930s near-term…” price in turn this past week reaching down to 1942;
- As penned for the Fed: “…preparing for another +0.25% FedFundsRate pop…” which unsurprisingly came on Wednesday;
- As penned for the S&P: “…concluded its 34th day as “textbook overbought … akin to nearly falling off the edge of the Bell Curve…” now instead having extended through 39 days!
But wait, there’s more per this seasonal note: as July comes to a close each year, Gold is seeing its COMEX contract volume roll from that for August into that for December. Annually, this the largest volume transfer leap by months for any of the BEGOS Markets (Bond, Euro/Swiss, Gold/Silver/Copper, Oil, S&P 500). And given the increasingly higher cost of money, Gold’s contango this time ’round is a whopping +40 points, the largest we’ve ever witnessed for the August-into-December contract rollover. In round numbers, August Gold settled this past week yesterday (Friday) fairly “spot on” (if you will) at 1959; whereas December Gold settled at 1998.
“Such phenomenon arising from what, mmb?
We love Squire’s occasionally leading question toward making the author look good, (especially in this case as our good man ostensibly worked on vault design in Amsteg).
But ’tis quite simple: as interest rates rise, so in turn does the cost to storers of physical Gold; they thus pass such cost on to those obliged to purchase that Gold in the future. The point is: when we again meet in a week’s time, the change in Gold’s price for this ensuing week shall “benefit” from a +40 point bump … just in case you’re scoring at home. Moreover, such bump could lend enough “umph” to flip Gold’s key weekly parabolic trend from Short to Long. For the present, here’s the picture, the rightmost red dots of declining trend having completed their stint’s 10th week:
Either way, it being month-end (save for a day), scoring the most so far this year as we turn to the BEGOS Market Standings is again the ridiculously overvalued S&P 500, the podium positions still respectively rounded out by Gold and the Swiss Franc. And pity the poor ol’ Dollar: back at February’s end, the Buck placed third in this stack, from whence ’tis sunk like a leaden sack. Thus for you StateSiders contemplating that late-summer spree to The Continent: how’s that travel budget workin’ out for ya? Hat-tip ZurichSpots: the average cost of your two-sip espresso therein is CHF4.50 (i.e. USD5.20). Your five bucks “Gone in 60 seconds!” –[1974, Halicki Junkyard & Mercantile Co.] Here’s the table:
‘Course as we all know, the more Dollars there are, the less is their worth. And even as the Federal Reserve has shrunk the StateSide money supply (basis “M2”) by -6% from $22.05T (18 April ’22) to $20.76T (today), ’tis still nonetheless +34% net since the $15.45T level at the commencement of 2020.
However, the rate of inflation by the Fed’s favoured gauge (Core Personal Consumption Expenditure Prices) is trending toward the 2% goal per the following graphic. Indeed, annualizing Core PCE for June (0.2% x 12) we’re nearly there at just 2.4%; but by the 12-month summation, ’tis still nearly double (3.9%) that desired by Jay Powell and his Merry Open Market Committee. How might this appear and be judged through July’s Core PCE (due 31 August) with the FOMC’s next Policy Statement (on 20 September)?
Too, there’s the old adage that “the rising tide of inflation lifts all boats” which (save for the price of the descending Bond, its yield thus rising) we next see via these grey diagonal trendlines across the last 21 trading days in going ’round the horn for all eight BEGOS components. ‘Course, the cautionary note now is the “Baby Blues” of trend consistency beginning to run out of puff…
Further, “a lot can happen in seven weeks”, including the Fed having to acknowledge a massive stock market “correction” … at least we continue to anticipate such. As we penned away back on 28 January with respect to the S&P 500 for this year: “We anticipate sub-3000”, a mere -35% from here (4582 –> 3000). Simply for our “live” S&P price/earnings ratio now 58.0x to revert — as always happens — to its own lifetime mean of 40.1x (from the year 2013-to-date) necessitates an El Plungo of better than -30%. Too, as we tweeted (@deMeadvillePro) on Thursday, the S&P’s MoneyFlow relative to the Index itself clearly is becoming less supportive. And ’tis the Flow that leads your invested dough, (to the extent it can be retrieved upon it all going wrong, you know).
Yet fortunately for stock market bulls, earnings generation (or lack thereof) no longer matters. And you may have caught on to that at which we hinted in last week’s missive. But this time ’round let’s do the math:
One year ago today the S&P 500 stood at 3819, its “live” P/E that day 30.0x: the imputed earnings (i.e. price ÷ ratio) thus 127. Now let’s impute that for today … Oh Dear! Only 79! Have S&P year-over-year cap-weighted earnings actually plummeted by -38%? How come this isn’t on Foxy, nor Bloomy, nor CNBS? (Rhetorical question). As is our wont to say, the Investing Age of Stoopid continues.
Meanwhile continuing to yo-yo like there’s no tomorrow is the Econ Baro, its 22-year record of directionally leading the S&P 500 having come to a halt during 2020, concurrent with the commencement of COVID. The following view from one year ago-to-date is not indicative of the StateSide economy being poor; rather ’tis merely reprising the 1995 Chris Isaak piece: ““Goin’ Nowhere“:
And yo-yoing indeed: of the past week’s 12 incoming Economic Barometer metrics, period-over-period six were better and six were worse. Belying the most recent months of the Baro was the first peek at Q2 Gross Domestic Product having picked up by an annualized rate of +2.4%; however, some 48% of total nominal growth was purely inflationary (per the Chain Deflator). Still, the best of the week’s reports were for July’s Consumer Confidence along with June’s Durable Orders and Personal Spending, all three of those beating consensus and their prior periods, all also revised upwards. However: the week’s biggest stinker was June’s New Home Sales, which missed consensus and slowed from the prior period, itself revised lower.
But at least the S&P 500 yesterday recorded a nearly 16-month closing high … whew! To again quote former Buffalo Bills Head Coach Marv Levy: “Where else would ya rather be?” Ummm… Gold?
Speaking of which, again it being all but month-end, let’s next assess Gold year-over-year along with the cream of its equities crop. From worst-to-first we find Pan American Silver (PAAS) -18%, Newmont (NEM) -7%, the Global X Silver Miners exchange-traded fund (SIL) +8%, Gold itself +13%, Franco-Nevada (FNV) +14%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +20% and Agnico Eagle Mines (AEM) +30%. Yet have we said in the past not to pass on PAAS? Its average ratio to the price of Silver century-to-date is 1.23x … but per yesterday’s settle ’tis just 0.64x. “A word to the wise is sufficient” –[Plautus and Terentius, 200 BC]. Here’s the graphic:
From latin playwrights to living profiles we go, specifically with Gold’s 10-day Market Profile on the left and same for Silver on the right. Note that the yellow metal’s pricing is calibrated for the now volume-dominant December contract, whilst the white metal is still attuned to September, both metals well off their respective fortnight highs:
Toward this week’s wrap we bring up Gold’s Structure by the monthly bars from 2011-to-date. Ripe for the taking remains that “triple top”:
Peeking ahead to the ensuing week’s barrage of incoming Econ Baro metrics, we find four “by consensus” expected to improve, but seven expected to slow, including StateSide job creation. Which with rising interest rates portends stagflation?
Best to avoid that which is raving and go — as is this wise youngster — with what’s behaving … Gold!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter: @deMeadvillePro
28 July 2023 – 09:11 Central Euro Time
Both the Bond and the Swiss Franc are at present below their respective Neutral Zones for today, whilst above same are both Copper and the Spoo; overall BEGOS Markets’ volatility is mostly moderate: of note on the heels of yesterday’s Yen acceleration, it today has already traced 306% of its “expected daily trading range” (EDTR). At long last, the S&P may finally be running out of puff, its “textbook overbought” condition entering a 39th consecutive trading day which ties it for the 10th-longest such streak across the past 44 calendar years; yesterday’s selling after the Index reached 4607 was sufficiently swift that perhaps “the light is going on” as to stocks’ extreme overvaluation. Specific to the Spoo, its “Baby Blues” look to curl below their key +80% level come Monday, suggestive of materially lower price levels; and yesterday, the Spoo confirmed a negative crossing of its Market Magnet, which too points to lower price levels. The Econ Baro looks to the Fed’s favoured Core PCE for June, along with the month’s Personal Income/Spending data, plus Q2’s Employment Cost Index.
27 July 2023 – 09:03 Central Euro Time
The Bond, Oil and the Spoo are at present all above today’s Neutral Zones; none of the other BEGOS Markets are below same, and volatility already is firmly moderate. Gold’s cac volume is rolling from August into December: the price premium for the latter is +40 points over spot. The S&P 500 looks to provisionally open a 38th consecutive trading day as “textbook overbought”; the futs-adj’d live P/E is 57.9x. By Market Values, the Spoo is +108 points above its smooth valuation line, whilst Oil is +7.47 points above its like measure. The Econ Baro awaits June’s Durable Orders and Pending Home Sales, plus the first peek at Q2’s GDP.
26 July 2023 – 09:09 Central Euro Time
Ahead of the Fed, both the Swiss Franc and Gold are at present above their respective Neutral Zones for today; below same are Copper and the Spoo; session volatility as expected is mostly light. 36 days now is the S&P 500 “textbook overbought” at what we deem an “extreme” level given BollBands, RSI and Stos all triggering as such. Our MoneyFlow page suggests weakening of the Flow vis-à-vis the Index itself, albeit since last Thursday’s massive monetary drain (see both our 21 July comment and the current edition of The Gold Update) there has yet to be any realized follow-though. June’s New Home Sales come due for the Econ Baro, followed late in the session by the FOMC’s Policy Statement incorporating a FedFunds raise of +0.25% to their 5.25%-5.50% target range.
25 July 2023 – 09:10 Central Euro Time
Our two Euro Currencies plus the metals triumvirate are above today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is light-to-moderate, the metals garnering the most amount of ranginess to this point. The S&P 500 yesterday recorded its 35th consecutive day as “textbook overbought”, the “live” P/E (futs-adj’d) now 57.7x. Looking to Market Rhythms, on a 10-test swing basis the most consistent studies are the Bond’s 30-min. MACD and the Euro’s daily MoneyFlow, whilst on a 24-test swing basis the best of the bunch are Oil’s 15-min MACD and 15-min. Parabolics, plus the Yen’s (not yet an official BEGOS Market) 15-min. MoneyFlow. By Market Values, we’ve Oil (in real-time) better than +7 points above its smooth valuation line, whilst the Spoo is +116 points above same. The Econ Baro looks to July’s Consumer Confidence.
24 July 2023 – 09:06 Central Euro Time
Whilst none of the BEGOS Markets are at present outside of their respective Neutral Zones for today, the overall tilt is negative, save solely for the Euro which is +0.1%; volatility is notably light. The Gold Update anticipates price struggling a wee bit this week as the Fed looks on Wednesday to raise their FundsRate +0.25%. Again emphasized is the vast overvaluation of the S&P 500: indeed comparing year-over-year price to the cap-weighted P/E, the imputed level of earnings for the Index as a unit is significantly lower; the futs-adj’d “live” P/E of the S&P is 57.5x. The Econ Baro again is quiet today ahead of 12 metrics due as the balance week unfolds.
The Gold Update: No. 714 – (22 July 2023) – “Gold’s Push Hits Stop; Fed Preps Rate Pop; S&P Set to Flop”
The Gold Update by Mark Mead Baillie — 714th Edition — Monte-Carlo — 22 July 2023 (published each Saturday) — www.deMeadville.com
“Gold’s Push Hits Stop; Fed Preps Rate Pop; S&P Set to Flop“
Quite the trifecta in our title: Gold, the S&P and the Fed all well in play for the week ahead.
And straightaway we start with Gold — which considering ’tis still within its Short trend — had nonetheless been firming well of late, price having proceeded from 1901 to 1990 across just 15 trading days. Indeed just a week ago we mused that given Gold’s expected ranginess, price could flip such Short trend to Long basically by month’s end. Quantitatively that’s still in play as we turn to Gold’s weekly bars from a year ago-to-date, the rightmost re-dotted parabolic Short trend having completed its ninth week in duration. Given the yellow metal’s having settled the week yesterday (Friday) at 1964, the upside distance to the trend’s “flip price” at 2014 is precisely 50 points — which whilst a stretch with but six trading days left in July — is “reachable” as Gold’s expected weekly trading range is now 54 points:
However: in that vein, this past week saw Gold’s prodigious push hit a sudden stop on Thursday, well-exemplified by the following two-panel graphic. On the left we’ve Gold’s past week as charted by 8-hour candles, wherein we see the “push” suddenly morph into the “stop”. On the right we’ve Gold’s month-to-date view as charted by 12-hour candles, the key there being the lower panel’s MACD (“moving average convergence divergence”) provisionally making a negative cross as encircled:
And specific to that negative MACD crossing, such study at present lists as our best “Market Rhythm” for Gold, as direct from the website’s “Gold” page comes the next chart. ‘Tis the price of Gold again by 12-hour bars, but this time from as far back as 28 February-to-date: when the bars are green, the MACD is in positive mode; when they are red, the MACD in negative mode; and the next bar to paint shall be in red upon Monday’s commencement of trading. ‘Course, hardly are MACD designations perfect, for as is the case with conventional technical studies, they are behind the curve, albeit directionally helpful should price continue to actually “go somewhere” as you can see:
“But is this negative 12-hour MACD really that damaging to the price of Gold, mmb?“
Actually ’tisn’t, Squire. But it does give us an idea of how low Gold may go before price resumes northward. The past eight negative MACD crossings saw price fall by an “at most median” of -20 points or by an “at most average” of -30 points. Soley in that vacuum, with price today at 1964, such suggestion is we can thus see the 1940s-to-1930s near-term … which for the long (indeed eternal)-term Gold-holder is mere “noise”. The point is: be thee not discouraged by perhaps a week of price retrenchment as the Federal Reserve rears its rate hike head come Wednesday (26 July).
Yes the Federal Reserve’s Open Market Committee is preparing for another +0.25% FedFundsRate pop. As we’ve previously opined, we doubt such desire to raise shall be thwarted by the recent perception that inflation is slowing: recall that June’s CPI rate rose to +0.2% from +0.1% in May, whilst that for the PPI rose to +0.1% from -0.4% (i.e. deflation). Fairly acknowledged however, both measures via 12-month summations are declining. But: this is the Fed and ’tis in their head to go with Core Personal Consumption Expenditure Prices, which when last reported for May were running at nearly double the Fed’s desired annualized +2% rate … and which for June shan’t be reported until two days (28 July) following these next Fed Follies (26 July), lest we not also overlook the first peek a Q2 GDP on Thursday (27 July). Thus following those two post-Fed vital reports, we’ll have “nuthin’ but Fed” through the FinMedia thread right into the FOMC’s 20 September Policy Statement: you know, “Can the Fed reverse this market crash?” and so forth. (Keep reading).
And “conventionally”, both Gold and the Dollar are sensitive to Fed interest rate moves. Moreover, we’re already seeing it. As comprehensively detailed above, Gold appears poised to retrench just a bit. For respect to the Dollar, it tends to get a bid given an increased rate of interest. Which is why from the website’s “€uro” page, we see that currency (similar to Gold’s healthy run of late) having just now penetrated down through our “Market Magnet”, a leading event that perceives lower levels near-term, (i.e. the Dollar gaining back ground against the €uro). To wit the graphic of the €uro (thin line) across the past three months-to-date displaying the rightmost downside penetration of its Magnet (thick line). See how the Fed can making trading fun? (If you “know” in advance what’s to come):
As to what’s to come for the S&P, hardly do we see it as pretty. Rather ’tis primed to flop. Yes, of course there’s its massive overvaluation, the S&P 500 today at 4536, its “live” price/earnings ratio having settled the week at 57.5x. And ’tis not getting much help from Q2 Earnings Season: thus far with 71 constituents having reported, just 56% have improved their bottom lines from a year ago (when the mighty Index was 3962 and the “live” p/e then “only” 31.6x). What does that say about Earnings relative to Price? Uh-oh…
But wait, there’s more. As we tweeted (@deMeadvillePro) last Thursday: “S&P only -0.7% today (Thu) but the MoneyFlow drain was the most for any one day since 13 Sep ’22. Suggests near-term top is in place.” The S&P was buffered Thursday by a spritely Dow, (i.e. that Index at which our parents used to look). But the S&P’s negative MoneyFlow — a favoured leading indicator — was massive as dough poured from these 10 constituents: Telsa (TSLA), Nvidia (NVDA), Microsoft (MSFT), Amazon (AMZN), Apple (AAPL), “Faceplant” (META), Netflix (NFLX), Advanced Micros Devices (AMD), and both tranches of Alphabet (GOOGL and GOOG).
Moreover, do you remember what happened from last year’s noted autumnal day of like massive MoneyFlow negativity? From the following day’s high, the S&P careened -393 points (-10%) in a mere 20 days. And now here we are again. Such fact hasn’t made it through the FinMedia — their focus being on “how the S&P makes a new high” — but as usual, ’twill become apparent well after the selling has kicked into gear. Or if all of this is too complex for you WestPalmBeachers down there, as of yesterday’s close, the S&P concluded its 34th day as “textbook overbought”. That is akin to nearly falling off the edge of the Bell Curve. Reprise with emphasis: Uh-oh…
Then there’s the tried-and-true Economic Barometer, which as you long-time readers know from its inception back in 1998 led stock market direction for some 22 years until the Fed’s distortions of the StateSide money supply in the name of COVID essentially made the S&P unilaterally rise despite meager growth in both the economy and earnings. That cited, the divergence now between the Baro and the S&P 500 is becoming somewhat startling:
The good news of course is that “everybody knows” the stock market never goes down in summertime, (the exceptions being the S&P 500’s double-digit percentage “corrections” during the summers of ’74, ’75, ’81, ’90, ’01, ’02, ’07, ’08, ’11, ’15 and ’22). Might we press you to another cucumber sandwich and lemonade?
Pressing a bit is this next two-panel view of Gold, its daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. The rising baby blue dots of trend consistency are as firm as ever, but to remain so, price has to stay on its upside go, else see them kink lower as you know. And present price in the Profile says it all, that 1965-1963 apex now the support/resistance wall:
Similar yet again is the picture for Silver, her “Baby Blues” (at left) having just eclipsed the key +80% level but with a bit less puff, whilst 25.05 in the Profile (at right) appears more resistive in our sight, with present price 24.78 having slipped a mite:
So quite a lot there to digest from this week’s missive, with material we trust you find useful if unavailable anywhere else. And speaking of anywhere, a lot is on table for all of our BEGOS Markets (Bond, Euro/Swiss, Gold/Silver/Copper, Oil, S&P 500) as these next days unfold, the FOMC’s Wednesday’s rate hike certainly to play into the mold. But you know what monetarily to love and hold: Gold!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter: @deMeadvillePro
21 July 2023 – 09:04 Central Euro Time
Both Copper and Oil are above their respective Neutral Zones for today; none of the other BEGOS Markets are below same, and volatility is mostly light. Whilst the S&P 500 yesterday lost but -0.7%, its MoneyFlow (a favoured leading indicator) was the most negative since 13 September 2022, (following which within 21 days, the Spoo fell as much as 383 points); and despite yesterday’s move lower, the S&P remains “textbook overbought” now through 33 consecutive trading days. Q2 Earnings Season through yesterday finds 64 S&P constituents having thus far reported with 55% having done better year-over-year: the fut’s-adj’d “live” P/E is 56.8x. The Econ Baro takes a breather following its negative week.
20 July 2023 – 09:37 Central Euro Time
Copper is the only BEGOS Market at present above its Neutral Zone for today; below same are both the Bond and Spoo, and session volatility is pushing toward moderate. The S&P 500 is frightfully overcooked, its settle yesterday (4566) recording a 32nd straight day as “textbook overbought” (a combination of BollBands, Stos and RSI); indeed looking back through better than 40 years of daily data, such string is into rarefied air. Specific to the Spoo (4587) — when it finally lets go — structural support runs from 4498 down to 4411. Early on in Q2 Earnings Season, what had started robustly is starting to sag, thus far with only 58% of S&P constituents having improved their bottom lines over those of a year ago. ‘Tis a busy day for the Econ Baro (which wraps its week today), incoming metrics including July’s Philly Fed Index, plus June’s Existing Home Sales and Leading (i.e. lagging) Indicators.
19 July 2023 – 09:12 Central Euro Time
Both the Bond and Spoo are at present above today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is light-to-moderate. The S&P 500 yesterday completed its 31st consecutive trading day as “textbook overbought”, and the Spoo by Market Values (in real-time) is +180 points above its smooth valuation line.; the “live” P/E of the S&P is (futs-adj’d) 59.1x. By Market Rhythms on a 10-test swing basis, our two best studies are Copper’s 4-hr. MACD and the Euro’s daily MoneyFlow. More housing data arrives for the Econ Baro via June’s Housing Starts/Permits.
18 July 2023 – 09:13 Central Euro Time
With the S&P 500 having just completed its 30th consecutive trading day as “textbook overbought”, today finds at present the Bond, Euro, Swiss Franc, Gold and Silver all above their Neutral Zones; none are below same, and volatility is light. The five primary BEGOS are now all in positive correlation, typical of what we’ve seen historically when “money is flowing into everything” during Dollar weakness. Moreover by Market Trends, the “Baby Blues” for all eight BEGOS components are rising. Q2 Earnings Season very early on appears off to a better start than in several years past. And ’tis a busy day for the Econ Baro as due is July’s NAHB index, June’s Retail Sales plus IndProd/CapUtil, and May’s Business Inventories.
17 July 2023 – 09:18 Central Euro Time
‘Tis a mixed start to the week for the BEGOS Markets. At present, the Swiss Franc is above its Neutral Zone for today, whilst below same are Copper and Oil; the latter’s cac volume is rolling from August into September. Session volatility is mostly light, save for Copper having already traced 80% of its EDTR (see Market Ranges). The Gold Update has more conviction that the recent low (1901 futs) may stand as the parabolic Short trend can unwind within a couple of weeks; too, the overwhelmingly extreme valuation of the S&P 500 again is emphasized: its futs-adj’d “live” P/E is 58.1x and the Spoo by Market Values is (in real-time) +156 points above its smooth valuation line. The Econ Bara awaits July’s NY State Empire Index.
The Gold Update: No. 713 – (15 July 2023) – “Gold Garners Glow; Stocks Go Whacko”
The Gold Update by Mark Mead Baillie — 713th Edition — Monte-Carlo — 15 July 2023 (published each Saturday) — www.deMeadville.com
“Gold Garners Glow; Stocks Go Whacko“
On the off chance you somehow missed this past Monday’s early morning tweet (@deMeadvillePro) with Gold then wallowing about in the 1920s, here ’tis:
“Gold’s ‘Baby Blues’ have confirmed moving above their -80% axis, indicative of higher price levels near-term; a run to the overhead 1980-2020 support structure would not be untoward; still, the broader weekly parabolic trend remains Short”
Thus for the nonillionth time, we repeat: “Follow the Blues…” Here’s the animated picture by the day from one week ago through yesterday (Friday) as Gold went on the ascent:
Indeed for this past week, Gold’s low-to-high gain of +50.5 points was on a percentage basis its best (+2.633%) in over three months (since the week ending 06 April) toward settling yesterday (Friday) at 1959, the high en route being 1969.
Enthused by it all, as email-queried a most-valued charter reader of The Gold Update: “When is Blast-off Time?” We responded in part as follows:
We below see such remains the case through now eight weeks of descending parabolic red dots, the prescient wee green support line nonetheless still marking the precise recent low, (should it not later let go):
And what the professor therein is going on about per Gold’s EWTR (“expected weekly trading range”) being 55 points — the distance from present price (1959) to the parabolic “flip trend” price (2024) being but +64 points — is that Gold appears well within range of reaching up there in a couple of weeks, (save for the cruelly conniving COMEX crushers coming first to the fore to beat price down more, as is their ardour).
Either way, ’tis good to see Gold getting a bid as “’tis said” inflation is shutting its lid, the Dollar Index in turn having just traded to as low as 99.260, a level not seen since 05 April 2022.
‘Course, you know, and we know, and everyone from Bangor Maine to Honolulu and right ’round the world knows: the StateSide June inflation reports this past week for both the retail and wholesale levels are not those at which the Federal Open Market Committee preferably view; rather ’tis Core Personal Consumption Expenditures pricing, which for June shan’t be reported until 28 July, two days after the FOMC’s next Policy Statement of 26 July. And you’ll recall, the annualized May Core PCE reading was nearly double that ultimately sought (+2%) by the Fed, which of course on 14 June “paused” … but prematurely?
Or as put forth this past week in a headlining opinion piece by one Peter Morici to Dow Jones Newswires: “Fed fumble on inflation has left the U.S. economy vulnerable to stagflation.” No argument here. Further as SanFran FedPrez Mary Daly just said: “It’s really too early to declare victory on inflation”. In tow, perhaps long-time Fedder (34 years!) James “Bullish” Bullard is stepping down in St. Louis at just the right time to become the Dean of the Boilermakers’ Business School.
Then from the “Fun With Numbers Dept.” came another DJNw piece offering “Measure It Differently, and Inflation Is Behind Us … Gauge U.S. price changes the way Europe does, and inflation was already just below 3% in May.” Right. That plus a subway token won’t get you anywhere.
But wait, there’s more. ‘Twas also reported this past week that the larger StateSide banks face growing loan losses, for which Fed ViceChair of Supervision Mike Barr says more capital shall be required. From where does that come, hmmm?
Or how’s this for an inflation gauge: when we took up skiing back in ’64 at the eternally-charming Sugar Bowl, a child’s all-day lift ticket cost $2. As of last season, ’tis $96 for your kid, a 58-year increase of +4,700%. Inflation indeed.
Meanwhile, incoming metrics to the Economic Barometer have lost all sense of direction, the blue line now tracking as a yo-yo whilst yo-yo’s flock to stocks. Did you see where the “live” price/earnings ratio for the S&P 500 settled yesterday? 58.2x. And the Index itself recorded its 29th consecutive day of being “textbook overbought”. The good news however for the S&P is that math illiterates still parrot the P/E as being “twenty-something”. Remember that hit by Chicago from back in ’77 “Baby, what a big surprise”? Oops… Here’s the Baro:
To be sure, what the stock market does have going for it is the modern-day irrelevancy of earnings. And the unaware herd feed on it. Per this past week’s settles, paying 235x earnings for a share of Nvidia is peanuts; to shell out 321x earnings to own Amazon is a steal. In fact whilst we’re at it, 33 of the S&P 500’s 503 constituents presently have P/Es exceeding 100x. Again reprising Jerome B. Cohen: “…in bull markets the average [P/E] level would be about 15 to 18 times earnings.”
Regardless, whilst it appears that money continues to be wantonly thrown at the stock market, this glance from website’s MoneyFlow page suggests Flow relative to Price may finally be just starting to run out of puff, albeit the rightmost panel (one quarter) differential remains on balance bodaciously bullish:
And how about the “VIX”? Such infamous measure of equities’ “complacency” is down to 13.34: sub-13 can be regarded as “overly-complacent”. Got stocks? (We don’t). More on that in this missive’s wrap.
Returning to the precious metals (yeah we got those), here is our two-panel graphic featuring the daily bars for Gold (expanded from the aforeshown animated view) on the left and for Silver on the right. And therein Silver is the real story: in just the past 16 trading days, the Gold/Silver ratio has dropped from 86.4x to now 77.9x, (yet still well above the century-to-date average of 67.6x). But ’tis basically a three-week Silver gain of +12.9% versus just +1.8% for Gold. How many times have we herein written “Don’t forget the Silver!” Here’s the graphic … Boom!
So as we next turn to the 10-day Market Profiles for Gold (below left) and for Silver (below right), ’tis no surprise to see Sister Silver essentially at the top of her stack, whereas Gold did back off a bit into week’s end:
And now for the teased wrap. Since dear old Dad taught us how to read the newspaper stock tables (back during that same year in which we learned to ski), never to this day have we seen our FinMedia colleagues so “All-In!” on the stock market. The left-hand panel in the following graphic (with a tip of the cap to Getty Images’ iStock Photos) was displayed this past Thursday by DJNw. Certainly over the many generations of financial reporting, seasoned investors — from Joe Kennedy and his shoeshine boy to today’s few alert folks who are misvaluation-aware — regard such wreckless abandon as “The Top … That’s it.”
Whether ’tis or ’tisn’t, our view clearly is that of the right-hand panel, if for no other reason than history repeats itself:
And thus: we repeat ourselves as Gold gets some glow but stocks go whacko: “Got Gold?”
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter: @deMeadvillePro
14 July 2023 – 09:05 Central Euro Time
‘Tis looking lower early on for the BEGOS Markets: the Bond, Euro, Gold, Silver, Copper and Oil are all below their respective Neutral Zones for today; volatility is again light, (save for the non-BEGOS Yen which already has traced 96% of its EDTR [see Market Ranges for the BEGOS Markets]). The S&P 500 is now 28 days “textbook overbought”, the live P/E (fut’s adj’d) now an unconscionable 58.6x. By Market Values, the Spoo (in real-time) is +174 points above its smooth valuation line. By Market Trends, Silver’s surge has rotated its linreg trend from negative to positive. The Econ Baro completes its week with July’s UofM Sentiment Survey and June’s Ex/Im Prices.
13 July 2023 – 09:11 Central Euro Time
Following an unusual session wherein 7 of the 8 BEGOS Markets (save for Oil) achieved their “high if an up day”, thus far today we’ve (at present) both the Swiss Franc and Silver above their Neutral Zones; none of the other components are below same, and volatility is light. On June’s “slowing” inflation news, the Dollar Index traded down to its lowest level since April 2022; ’tis at present 100.070. Gold continues to ascend in sync with its “Baby Blues” (see Market Trends), thus far low-to-high this week from 1918 to 1968. The well-overvalued S&P 500 completed its 27th day as “textbook overbought”, the “live” P/E (fut’s adj’d) now 57.4x. Incoming metrics for the Econ Baro include June’s PPI and Treasury Budget.
12 July 2023 – 09:14 Central Euro Time
The Bond and Swiss Franc are at present above their respective neutral Zones for today. None of the other BEGOS Markets are below same, and volatility is basically light. Our page for the S&P’s MoneyFlow shows as just perceptively weakening a tad even as the Index has risen both days so far this week; and in real-time, the Spoo’s “Baby Blues” (see Market Trends) continue to descend; by its Market Profile we see Spoo trading resistance at 4485 with support initially at 4445. As for the Bond which may well be affected by today’s CPI reading for June, there is Market Profile support at 124^00; however, should inflation have increased over May’s pace, the “low if a down day” for the Bond appears as 123^09. Late in the session comes the Fed’s Tan Tome.