31 thoughts on “CHART OF THE DAY

  1. bob davis

    Looking at the past four years the clear evidence has been that QE has caused stocks to rise and commodities to fall.

    1. gary Post author

      That’s nonsense. QE does not cause commodities to fall. The simple fact is the fed has been protecting the stock market. If you have a guarantee in stocks then there isn’t a lot of motivation to look elsewhere for investments. Add to that the manipulation of the paper market in gold tocreate abear market and you have the recipe for commodities to stagnate and stocks to soar.

      1. bob davis

        You say it’s nonsense(you have used that word a lot recently) but then look at the charts you have posted above. Ok you think the markets gold/coms and gold are manipulated so why would the manipulation change if a new round of qe is introduced. I’ll say it again qe is invested in stocks not the commodities, that’s what the evidence has pointed to so far, nonsense indeed!! You also say that the four year gold bear market has been orchestrated, do you have any evidence for that?

  2. Frank

    Some others see SPX correcting or even crashing after this week(s) as they see the current rally a rally to take out the shorts before a massive decline. From EW perspective we are in the last upwave of a ABC pattern that followed the August decline. Maybe Gary is too bullish?

  3. Ryan

    I give this blow off/bubble about a 5% chance of happening. Only if QE4 is launched and at the same time rates go deeply negative (i.e. real yields well below 0%).

    S&P 3,800 by 2017? That seems highly, highly unlikely.

    The stock market is already in a valuation bubble by any traditional metric (Tobin’s Q, Mkt Cap/GDP ratio, Shiller P/E ratio).

    1. Tim

      I agree that it will be hard to take off from here without further turmoil in the markets.
      advance/decline has to get back above the peak in the spring to have a chance, hard to happen if china was ok last spring and now they are not, not to mention what europe is going through, hard to think along the lines we will go up because everyone else is in the toilet

    2. MuffinTop

      “The stock Market is already in a valuation bubble by any traditional metric”

      Ah, no it’s not dude! In fact, far from it.. The price to earning ration for the S&P 500 was around 18.4 last month when I checked – That ain’t bubble phase valuation bubba!

  4. Jeremiah

    Sentiment seems to have moved more bullish…even from the best contrarian indicators Gartman and Cramer. Perhaps now we go down hard?

    1. gary Post author

      I’m starting to lean more an more in that direction but I need to see a little more before I officially make the call.

  5. AlexP

    One of my calls for the 1st half of October is starting to move: USDX bulls have lost the fight at 50dma and now USDX is rolling down into its YCL !
    I advise caution to any bull in stocks now…….

    Besides the fact that the stock bull has lost momentum as VIX came close to sniff its 200dma (also watch my warning yesterday about this), the stock market is scattered with weakness and last but not least, without the intention of being arrogant, but it is a fact, so much bullishness on blogs (herein included) and media makes an excellent contrarian bearish add-on.

  6. Dan

    I know I agreed with you yesterday, but with biotechs tanking already today and SPY forming a possible right shoulder (and now plummeting after hours), I don’t know anymore.

    I booked profits on this IWN long today and am just riding the December SPY puts for now. High ho silver away though, I’ve got my fizz.

  7. Tim

    Remember last september Gold was the only thing going down, a year later and we think everything has bottomed, the following should not be taken lightly, a Bloomberg report:

    Commodity Collapse Has More to Go, Warn Goldman Sachs and Other Analysts
    Even with commodities mired in the worst slump in a generation, Goldman Sachs, Morgan Stanley and Citigroup are warning bulls that prices may stay lower for years.
    Crude oil and copper are unlikely to rebound because of excess supplies, Goldman predicts, and Morgan Stanley forecasts that weaker currencies in producing countries will encourage robust output of raw materials sold for dollars, even during bear markets. Citigroup says the sluggish world economy makes it “hard to argue” that most prices have already bottomed.
    The Bloomberg Commodity Index on Sept 30 capped its worst quarterly loss since the depths of the recession in 2008. The economy in China, the biggest consumer of grains, energy and metals, is expanding at the slowest pace in two decades just as producers struggle to ease surpluses. Alcoa, once a symbol of American industrial might, plans to split itself in two, while Chesapeake Energy Corp. cut its workforce by 15 per cent. Caterpillar may shed 10,000 jobs as demand slows for mining and energy equipment.
    “It would take a brave soul to wade in with both feet into commodities,” Brian Barish, who helps oversee about US$12.5 billion at Cambiar Investors. “There is far more capacity coming on than there is demand physically. And the only way that you fix the problem is to basically shut capacity in, and you do that by starving commodity producers for capital.”
    Investors are already bailing. Open interest in raw materials, which measures holdings of futures and options, fell for a fourth month in September, the longest streak since 2008, government data show. US exchange-traded products tracking metals, energy and agriculture saw net withdrawals of US$467.8 million for the month, according to data compiled by Bloomberg.
    The Bloomberg Commodity Index, a measure of returns for 22 components, is poised for a fifth straight annual loss, the longest slide since the data begins in 1991. It’s a reversal from the previous decade, when booming growth across Asia fueled a synchronized surge in prices, dubbed the commodity super cycle. Farmers, miners and oil drillers expanded supplies, encouraged by prices that were at record highs in 2008. Now, that output is coming to the market just as global growth is slowing.
    Over-investment in new supplies in the past decade and favorable growing conditions for crops caused gluts, Citigroup analysts led by Ed Morse, the global head of commodities research, said in a report Sept 11. The bank is bearish on crude oil, aluminum, platinum, iron ore, cocoa and wheat in the next three to six months.
    Investors need to brace for a “long winter,” with the commodities bear market predicted to last for many years and oil dropping to as low as US$35 a barrel, said Ruchir Sharma, who helps manage US$25 billion as the head of emerging markets at Morgan Stanley Investment Management in New York. Crude futures traded Tuesday at US$46.37, down from about US$90 a year earlier.
    Goldman Sachs has an even dimmer outlook. The odds are increasing that oil will slump near US$20 because the market is more oversupplied than initially forecast, analysts led by Jeffrey Currie, the head of commodities research, said in a Sept 11 report. Mr Currie, in an interview days later, said prices could stay low for the next 15 years. The bank also forecasts that copper will remain in surplus through at least 2019 and fall 13 per cent to US$4,500 a metric ton by the end of next year.
    Still, future production isn’t assured. Miners are already scaling back on spending, and extreme weather can cause surprise reductions in farm output.
    Rice, one of only a handful of commodities to rise this year, gained 14 per cent as a record-wet May in Texas and above- average temperatures in July in other growing states eroded US yield prospects. Companies from Glencore to Freeport- McMoRan are cutting metal output, and Royal Dutch Shell announced it would abandon its drilling campaign in US Arctic waters after spending US$7 billion.
    “Once you get to a certain price, you’re going to lose a lot of the players,” said Karyn Cavanaugh, a senior market strategist at Voya Investment Management, which oversees US$205 billion. “And at that point then, prices will go up.”
    Even if demand rebounds, there are still a lot of excess inventories to work through. US crude-oil stockpiles remain almost 100 million barrels above the five-year average. Copper inventories tracked by the London Metal Exchange have more than doubled in the past 12 months, and the International Grains Council sees wheat reserves climbing to a record next year.
    Investors are punishing producers. Glencore has lost about 60 per cent in market value this year, and credit markets already view its debt as junk. Seven of the 10 worst performers in the Standard & Poor’s 500 Index this year are commodities-related businesses.
    In the case of Caterpillar, the world’s most valuable machinery producer, share prices slumped 23 per cent last quarter, as the company struggled to cope with the ripple effects of the slump in oil. The company is cutting as much as 9 per cent of its workforce through 2018 to lower costs.
    “The global infrastructure and supply of commodities still needs to be re-balanced, and it will probably take a couple more years to resolve itself,” said Jack Ablin, chief investment officer in Chicago for BMO Private Bank, which oversees US$68 billion

    1. Al

      Good grief if you listen to your heavyweight banksters for trade guidance you really will be in trouble. In all likely hood the only thing that says, is that they are doing the complete opposite.

      Forget the news, trade what the charts tell you.

  8. Ricky

    Gary, what’s your view on Ed Carlson’s latest post on “safehaven.com” saying that gold will prob post a high 1st half of October and then eventually fall down to 1000 or 700 during 1H 2016?

  9. Tim

    facts and events rule markets, what is behind us was very bad in the last year but that does not mean now is the bottom and it is going to get better any time soon

  10. William

    Good to know that they are still “bears” around. It keeps those who are traders right on the dot and contrarian trades alive!

  11. BCJ

    Expecting a swing-high in the next day or so. If we get it, then we’ll see how far the market falls.

  12. Frank

    For stocks, do you realize you have a completed head-and-shoulders top that follows a diagonal triangle (or wedge) ending pattern? As big as life. On top of one of the fastest and most rigged rises in history. I don’t think it’s time to buy calls yet.

  13. tulip

    Thank you Gary for your efforts.
    Somehow… after reading about Glencore & Deutsche…I don’t think they’re raising the rate..because everybody was on one side of the boat….I thought there was a chance they would…..

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