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XIV Volume Showing Sign of a Price Top

weekly Chart In Focus

The short VIX trade has been described recently as “the most crowded trade” out there.  But traders of XIV, an inverse VIX ETN, have not been all that excited about it lately, judging by the trading volume.  And that says we have a topping condition for prices.

XIV invests in the two nearest month VIX futures contracts, so it is not a pure inverse VIX product.  The VIX futures sometimes behave a little bit differently from the spot VIX Index, and so anyone trading XIV should understand what... Read More

Silver COT: Commercials Betting Against Breakout

weekly Chart In Focus

The price of spot silver is trying really hard to break a long term downtrend line, which would arguably be a bullish development if the breakout succeeds.  But the big-money “commercial” traders of silver futures are betting heavily on a failure of that breakout attempt.

The Commitment of Traders (COT) Report is published every Friday by the CFTC, detailing futures positions held by traders in 3 different groups:
• Commercial traders are the big money, and usually the smart money.
•... Read More

Gold’s 13-1/2 Month Cycle: Right Translation

weekly Chart In Focus

Gold has been pushing up to higher closing highs, which is getting the gold bugs all excited.  But we are now late in the 13-1/2 month cycle that is dominant in gold prices, and so we should expect a drop into the major cycle low due at the end of 2017.

But there is a lot more to the 13-1/2 month cycle than just when to expect the major lows.  For starters, there is a mid-cycle low that usually arrives around the mid-point of the whole cycle.  The mid-cycle low is usually not as punctual as... Read More

GLD Assets Spike Higher

weekly Chart In Focus

A late-August surge in gold prices has finally attracted traders back into SPDR Gold Shares (GLD), the largest of the gold bullion ETNs.  This week’s chart looks at total assets held in the GLD Trust, which issues or redeems shares as needed in order to keep the share price as close as possible to the net asset value.  Those shares are backed by actual gold bullion, and so issuing more shares means more gold in their vaults.  Data are available from... Read More

Years Ending In 7

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Everyone knows about annual seasonality, and has heard of “Sell in May and go away”.  That slogan persists even though actual seasonal strength typically peaks in August, but nothing good rhymes with August.  There is also a strong tendency of the market to show regular patterns on a 10-year basis, now known as the Decennial Pattern.  And years ending in the number 7 have an ugly surprise for the bulls. 

In year 7s, the stock market typically peaks in August and bottoms in early November. ... Read More

Warm Temperatures Mean Lower Inflation, To a Point

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Members of the FOMC have been mystified about why inflation rates have remained low, and that has kept them from “normalizing” interest rates.  What they do not seem to understand is that the Fed is not really in control of inflation rates, and thus of interest rates.  But when you consider that the Fed has more than 1,000 PhD economists on staff, the likelihood of them looking outside of their lanes for insights is pretty slim, and so they are just not likely to realize that they are not... Read More

Volume in VXX Is A Tell For Price Bottoms

weekly Chart In Focus

The stock market’s quick selloff on August 10, 2017 came as traders got reintroduced to the concept of “event risk” after a long period of extreme quiet.  And like bad drivers during the first snowfall of winter, there was a lot of relearning going on about how the market works.

The CBOE Volatility Index VIX shot up to 16.04, after having closed below 10 just 3 days before.  And that led ETF traders to go wild with all of the VIX-related products.  VXX is perhaps the best known of these,... Read More