08 October 2019

Stocks and Precious Metals Charts - Seeking Safe Harbors

"A fair amount of the earnings growth the S&P 500 has exhibited in recent years might be ephemeral, related to gains in the value of companies’ investments rather than the underlying strength of their operations.   Under the hood, then, profit margins aren’t as good as they appear.   If business starts to falter, companies’ may take an ax to costs, with bad repercussions for the economy."

Justin Lahart, Wall Street Journal, Squeeze on U.S. Companies May Be Worse Than It Seems

"Every bubble rests on two pillars: a) it’s different this time; b) some other sucker will buy this worthless asset from me at a higher price, so I should hold on against my better judgment."

Louis-Vincent Gave

Today was clearly a 'risk off' day as stocks were sold steadily all day, and bearishly going out on the lows.

There was a corresponding bid of money seeking safer havens in gold, silver, and the Dollar.

The purported reason was the war of words that continues between the US and China.

As I noted several times in the past, this roller coaster action, this bipolar viewpoint towards risk in the markets, is not constructive, and may signal some inherent instability that seeks its level.

And that level may be about 20-30% lower, given the right sort of trigger event.

But as I have noted many times before, forecasting a significant market decline is something that people like to do, in order to grab headlines and subscribers.  But it can make you go broke if you try to front run the markets on the bearish side.

I will only urge caution, and note that markets are still near to all time highs.

Jay Powell provoked a little market rally today with some expansively dovish words about the Fed's Balance Sheet.

It did not last.

Gold and silver caught a definite safe haven bid.

Gold may be forming up a bull flag.  I have marked it on the chart, and took an estimate on the initial measuring objective.  

Obviously this means nothing until the formation goes active with a confirmed breakout.   But it's still nice to see that messy price action we saw into the October contracts option expiration start to clarify.

Silver is a a hot item, as they say.  Hard to predict, sometimes hard to hold.  But when it goes, it can ride.

Have a pleasant evening.