Stock Markets

Well the media always need to have a reason and this morning the reason for the hard down in the stock market is apparently second thoughts by investors on the Fed Minutes and QE tapering (with a side of Portugal/European problems).

What is actually happening is that it was time for a summer disturbance (at best) due to the factors we noted in the NFTRH excerpt on Monday.  At worst the bull market is ending, but the favored plan is for a significant – possibly scary – drop that refuels the bull for one more thrust.

But that preference does not have a lot of conviction behind it.  The only conviction I have right now is that the market is/was due for a July breather and this could be it.

People should have been prepared for this.

Precious Metals

On the precious metals, it sure does look like the potential for a bull market is becoming technically actualized off of the bottoming patterns in play for a year now.  Today it looks like European macro issues are getting involved.  What ever happens from here on – big emotional spikes and/or big emotional drops – if the gold stock sector starts making higher highs and higher lows, it’s a bull market.

The ‘quality leaders’ we have been tracking (RGLD and FNV) have already been making higher highs and higher lows for a year now.  Now the majority of the sector, where in many cases the value is (among a lot of garbage), is poised to follow.

Gold vs. Commodities and Gold vs. Stock Markets should take a leap with global macro economic and market issues cropping up.  The best case – the investment case – for the gold sector is counter cyclical.  People need to tune out inflationists touting oil and copper along side gold.  If the whole things rises in an inflationary asset grab, gold stocks are a SELL on the rally.

If however, gold out performs most other things, gold stocks are a HOLD and/or BUY the DIPS as in real bull market.

One thing is for sure, the market is getting interesting now.  I like it when it is in that condition.  Emotions may get stirred up with fear and greed entering stocks and precious metals respectively.  Time to quiet it all down and follow the charts, which funnily enough this post includes none of.