Time For Gold To Shine?

Some Color:  Since 1975, the second quarter of the year has been by far gold’s worst—with returns dead flat over the 41-year period—and this year has been no exception, with gold down about 1%. On the flip side, the third quarter has been the best, outperforming its closest rival, Q4, by a whopping 40%.

Given the clear seasonal patterns gold has exhibited over the past four decades, investors can use these trends to make strategic purchases when the market is the weakest.

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The GLD fell to new 2018 lows yesterday under heavy selling pressure.  The index retested its 40 week moving average, which had previously held a major low last December, during Monday’s sell off.  This morning Gold is rebounding nicely and may be in the early stages of a powerful new rally leg.  The seasonal patterns are certainly in line for this.

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At time of publication we are long GLD in some managed accounts.

 

Manufacturing Activity Surges

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From WSJ.com:  American factory activity accelerated for the second straight month in June, signaling momentum in the U.S. manufacturing sector.

The Institute for Supply Management on Monday said its manufacturing index rose to 60.2 in June from 58.7 in May. Numbers above 50 indicate activity is expanding across the manufacturing sector while numbers below 50 signal contraction.  Economists surveyed by the Wall Street Journal expected a 58.1 reading for June.

Rollbacks matter…

Remember when we were told these jobs were never coming back…

“When somebody says like the person you just mentioned who I’m not going to advertise for, that he’s going to bring all these jobs back. Well how exectly are you going to do that? What are you going to do? There’s uh-uh no answer to it. He just says. “I’m going to negotiate a better deal.” Well how? How exactly are you going to negotiate that? What magic wand do you have? And usually the answer is, he doesn’t have an answer.”

Hat tip WSJ.com/gatewaypundit.com

 

Silver

Silver, a poor performer for a long time. Breaks support at 16.

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Housing Bubble?

In San Francisco, sure looks like it.   Families Making $117,000 Qualify For Low-Income Housing:

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Hat tip Jesse Colombo

Wings of Cotton

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From Strategypage.com:  MEDITERRANEAN SEA (June 26, 2018) An F/A-18 Super Hornet flies over the Nimitz-class aircraft carrier USS Harry S. Truman (CVN 75) during a change of command ceremony for the “Fighting Checkmates” of Strike Fighter Squadron (VFA) 211. Harry S. Truman is operating in Commander 6th Fleet area of responsibility in support of maritime security operations alongside allies. (U.S. Navy photo by Mass Communication Specialist 3rd Class Rebekah A. Watkins)

Stacked Angels

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From Strategypage.com The Blue Angels, the Navy’s flight demonstration squadron, perform during the Vectren Dayton Air Show in Dayton, Ohio, June 23, 2018. Navy photo by Petty Officer 2nd Class Timothy Schumaker

The Second Weakest Quarter

It begins Monday, the second weakest quarter of the four year Presidential cycle.  Down 0.5% on average, only the second quarter of year four is weaker:

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But, then there’s this…from Ryan Detrick:   What happens when the S&P 500 is higher in both May and June (like 2018 will likely be)?   The final six months of the year have been higher the past 11 times in a row. Going back to 1950?   The final 6 months are higher 19 out of 22 times.  Since ’50, full calendar year has never been lower on a total return basis. That is 22 yrs in a row in the green.   Since ’28? 29 of 30 years finished in the green.

Hat tip Ryan Detrick/LPLReseach

NKE

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Pessimism Rising

Sentiment

From AAII(American Association of Individual Investors):   Pessimism among individual investors about the short-term direction of stock prices is above 40% for just the second time this year. The latest AAII Sentiment Survey also shows a large drop in optimism and a decrease in the percentage of investors describing their outlook as neutral.

This is good news…

Mind The Breadth

The markets internals continue to show strength.  The NYSE Advance/Decline line continues to move steadily higher.  This breadth indicator has done a great job of forecasting bear markets in the past:

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More on the A/D Line:  Advance-Decline Index:   This indicator, also known as the AD line, calculates the difference between advancing and declining stocks. Traders typically look for divergence between the indicator and a major market index, such as the Standard & Poor’s 500 index (S&P 500). For example, if the S&P 500 is rising and the AD index is falling, it indicates the current uptrend may be losing its momentum. On the other hand, if the S&P 500 is falling and the AD index is rising, it suggests that the move lower may be about to reverse.

Hat tip Ryan Detrick/Investopedia.com
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Welcome fellow traders and investors!

As Money Managers and Traders, the mission of our Blog and Radio Show is to go on record and further educate our readers and listeners in technical analysis and proper money management across all asset classes.

Our methods are not the traditional advice you hear repeated and repackaged over and over again, but that’s exactly the point and the reason why we know how to advance and prosper in every kind of market.

To Your Success,

Doug & Gary