Dear subscribers,
This is update #1940 for Monday night, November 18, 2013.
While the Russell 2000 Index and its related funds including IWM, along with other small- and mid-cap equity funds and indices, couldn't surpass their October intraday peaks, the S&P 500 climbed to a new all-time zenith. This is precisely what happened previously in 2007 prior to the last severe bear market, as well as in 1972-January 1973 prior to that major bear market, and was a notable feature of the 1928-August 1929 top before the worst bear market in history. Therefore, unless "it's different this time" which it never is, or unless the Russell 2000 can succeed in achieving new highs during the next several months, we have probably already begun multi-year downtrends for many sectors which will continue until we are experiencing a full-fledged bear market by 2015 or sooner.
The most active December 2013 gold futures contract slid to a Monday 12:35 p.m. low of 1269.20 U.S. dollars per troy ounce, thereby remaining above its November bottom. However, the most active December 2013 silver futures contract slumped to a Monday 11:55 a.m. bottom of 20.290 U.S. dollars per troy ounce, which marked its lowest point since August 9. Platinum dropped to 1411.00, its lowest reading since October 17, while palladium also touched its lowest level (716.00) since October 17. Copper barely held above its recent lows which last week had registered its most depressed prices since August 7. While these important bottoms were being achieved, the shares of their producers completed higher lows virtually across the board. This behavior highlights an important positive divergence which I will discuss in more detail in today's main topic. I just missed buying SIL which touched my good-until-canceled limit price of 11.99 but traded only 100 shares there before it rebounded.
Here are some thoughts about the likely next head of the U.S. Federal Reserve beginning at the end of January 2014:
Since copper traded at its lowest point during the past week since August 7, 2013, you might expect to see a photographic explanation including warehouses piled high with copper--and you would be exactly right:
The following analyst is strongly bullish toward the future prospects for gold and gold mining shares:
This fellow is net short equities, while buying gold mining shares for the first time ever along with other mining and energy securities:
Here is a different (although distantly related) reason for owning precious metals and the shares of their producers:
Production cutbacks, termination of exploration projects, and mine sales will all curtail future gold production, eventually creating what the media will call a "shortage" (but only after prices rally sharply):
A third viewpoint discusses the implication of the large outflows from funds related to precious metals:
Here is a brief, incisive look at the behavior of materials shares overall in recent years and the likely follow-up:
Someone has a rare bullish outlook toward uranium producers including Cameco (CCO.TO) which constitutes 23.69% of URA as of Friday's close:
This analysis revisits a topic I discussed in more detail in update #1932 (Guilty), with the author reaching a similar conclusion:
Here are some photographs of Jerusalem which highlight several neighborhoods and religious faiths:
Trading is inherently different from other pursuits:
The U.S. dollar index rose to a Wednesday 10:30 a.m. high of 81.288, slid to a Wednesday 5:15 p.m. low of 80.732, climbed to a Thursday 6:20
a.m. high of 81.212, retreated to a Thursday 11:20 a.m. low of 80.847, rebounded to a Friday 4:45 a.m. high of 81.150, descended to a Friday 9:15
a.m. low of 80.780, closed Friday at 80.809, rose to a Sunday 8:15 p.m. high of 80.923, and retreated to a Monday 10:00 a.m. bottom of 80.565,
its lowest point since November 6, before trading Monday evening near 80.70.
The behavior of the U.S. dollar index appears to have confirmed that its July 2013 foray above the July 24, 2012 intraday high of 84.100
was a false upside breakout, with several important lower highs being completed since the U.S. dollar index topped out at 84.753 on July 9, 2013.
The U.S. dollar index will likely undergo an intermediate-term pullback toward a level in the mid-70s which will likely be completed
at some point in 2014. Emerging-market currencies had been especially out of favor during the first eight months of 2013, and will
therefore continue to be among the strongest to rebound into the first half of 2014.
The U.S. dollar index has been in a peculiar long-term bull market since March 16, 2008, when it had completed an all-time nadir at 70.698.
Since then, the U.S. dollar index completed its first higher low of 71.314 on July 15, 2008; its second higher low of 72.696 on May 4, 2011; its
third higher low of 73.421 on July 27, 2011; its fourth higher low of 73.452 on August 17, 2011; its fifth higher low of 73.525 on August 29, 2011;
and its sixth higher low of 74.724 on October 27, 2011.
It may have completed additional higher lows in November 2011, but we won't know that for certain until the greenback completes its current
intermediate-term retreat.
Peculiar is an excellent word, because the U.S. dollar index surged to an important high in less than one year on March 4, 2009, and has been
forming several important lower highs since then, thereby creating a long-term bear market which has persisted for roughly one year less in duration
than its long-term bull market.
On November 12, 2013, the U.S. dollar index climbed to a 4:35 a.m. peak of 81.464, its highest reading since November 8, 2013.
On November 8, 2013, the U.S. dollar index surged to a 10:30 a.m. peak of 81.482, its highest level since September 13, 2013.
On October 23, 2013, the U.S. dollar index slid to a 12:05 a.m. bottom of 78.998, its lowest level since February 1, 2013.
On September 5, 2013, the U.S. dollar index rallied to a 10:45 a.m. peak of 82.671, its most elevated mark since July 18, 2013.
On July 15, 2013, the U.S. dollar index rallied to a 7:50 a.m. peak of 83.460, its highest point since July 10, 2013.
On July 9, 2013, the U.S. dollar index rallied to an 11:40 a.m. peak of 84.753, its most elevated reading since July 5, 2010.
On February 1, 2013, the U.S. dollar index slid to an 11:45 a.m. bottom of 78.918, its lowest mark since September 18, 2012.
On September 14, 2012, the U.S. dollar index slumped to a 10:10 a.m. bottom of 78.601, its most depressed reading since February 29, 2012.
On July 24, 2012, the U.S. dollar index rallied to a 1:45 p.m. peak of 84.100, its most elevated reading since July 13, 2010.
On May 1, 2012, the U.S. dollar index dropped to a 9:55 a.m. bottom of 78.603, its lowest point since February 29, 2012.
On February 29, 2012, the U.S. dollar index retreated to a 12:05 a.m. bottom of 78.095, its most depressed mark since December 2, 2011.
On November 30, 2011, the U.S. dollar index slumped to a 9:00 a.m. bottom of 77.923, its lowest level since November 23, 2011.
On November 8, 2011, the U.S. dollar index slid to an evening bottom of 76.513, its lowest mark since October 25, 2011.
On October 27, 2011, the U.S. dollar index slumped to a 2 p.m. bottom of 74.724, its lowest level since September 6, 2011.
On August 29, 2011, the U.S. dollar index slid to a very early morning bottom of 73.525, its lowest point since August 17, 2011.
On August 17, 2011, the U.S. dollar index slumped to a mid-morning bottom of 73.452, its lowest level since July 27, 2011.
On July 27, 2011, the U.S. dollar index retreated to a very early morning bottom of 73.421, its most depressed mark since May 5, 2011.
On May 4, 2011, the U.S. dollar index slid to a mid-morning bottom of 72.696, its lowest point since July 29, 2008.
Relevant past peaks for the U.S. dollar index include 88.708 on June 6, 2010; 89.624 on March 4, 2009; 92.63 on November 16, 2005; 99.49 on August
26, 2003; and 120.99 on July 5, 2001.
I expect the U.S. dollar index to complete a historic top near the end of the next global equity bear market, perhaps in the year 2016, which
could be anywhere between 90 and 120.
TLT, a fund of U.S. Treasuries averaging 28 years to maturity, climbed to a Thursday 11:22 a.m. high of 105.12, slid to a Thursday 2:00 p.m. low
of 104.15, completed a Friday 10:48 a.m. higher low of 104.31, and then rallied to a Monday 3:58 p.m. peak of 105.40, its highest point since
November 7, before closing Monday up 59 cents at 105.32.
The behavior of TLT is typical for any asset which is still in a very-long-term bull market, but which has been forming several important lower highs
since July 25, 2012 and is likely to continue its decline during the next several months. This is part of a typical rotation from defensive to cyclical
assets, which occurs during nearly any transition from a multi-year equity bull market to a subsequent equity bear market. Because defensive
assets became more overvalued than usual and cyclical names including mining and emerging-market shares had been more undervalued than
usual during the summer of 2013, this rotation will likely continue to be stronger than average into the first several months of 2014.
TLT is likely to slump to roughly 90-100 where I will progressively repurchase it, perhaps during the final weeks of 2013 and probably during the
first half of 2014.
On November 11, 2013, TLT retreated to a 3:55 p.m. bottom of 102.96, its lowest mark since September 16, 2013.
On November 7, 2013, TLT rallied to a 3:58 p.m. peak of 106.05, its highest mark since November 4, 2013.
On October 23, 2013, TLT rallied to a 1:56 p.m. peak of 108.73, its highest reading since July 23, 2013.
On September 16, 2013, TLT slid to a 3:37 p.m. bottom of 102.85, its lowest reading since September 11, 2013.
On September 11, 2013, TLT slid to a 12:22 p.m. bottom of 102.19, its lowest level since August 22, 2013.
On August 22, 2013, TLT retreated to an 8:08:19 a.m. pre-market bottom of 101.89, its most depressed point since August 3, 2011.
On August 21, 2013, TLT slid to a 3:59 p.m. bottom of 102.11, its lowest regular-hours mark since August 3, 2011.
On July 22, 2013, TLT climbed to a 10:02 a.m. peak of 109.69, its highest level since July 3, 2013.
On July 2, 2013, TLT climbed to a 10:27 a.m. peak of 110.80, its highest point since June 20, 2013.
On June 14, 2013, TLT rallied to an 11:47 a.m. peak of 114.66, its highest mark since June 7, 2013.
On June 6, 2013, TLT rallied to a 12:26 p.m. peak of 116.79, its most elevated reading since May 24, 2013.
On May 22, 2013, TLT climbed to a 10:09 a.m. peak of 118.55, its highest level since May 16, 2013.
On May 16, 2013, TLT rallied to a 2:31 p.m. peak of 118.94, its highest point since May 10, 2013.
On May 9, 2013, TLT rallied to a 1:14 p.m. peak of 121.32, its highest mark since May 3, 2013.
On May 1, 2013, TLT rallied to a 1:24 p.m. peak of 124.26, its most elevated reading since December 12, 2012.
On December 6, 2012, TLT climbed to a 1:58 p.m. peak of 126.08, its highest point since November 28, 2012.
On November 28, 2012, TLT rallied to a 10:08 a.m. peak of 126.20, its highest level since November 16, 2012.
On November 16, 2012, TLT climbed to an 11:28/11:34 a.m. peak of 127.19, its most elevated mark since September 5, 2012.
On August 31, 2012, TLT surged to close at 127.72, its highest level since August 6, and traded in the after-hours session as high as 127.76.
On August 2, 2012, TLT soared to an 11:53 a.m. peak of 130.69, its highest point since July 26, 2012.
On July 25, 2012, TLT climbed to a 10:09 a.m. top of 132.21, an all-time record zenith.
On July 25, 2011, TLT slumped to a pre-market bottom of 94.75, its most depressed reading since July 7, 2011.
On June 30, 2011, TLT slumped to a mid-morning bottom of 93.29, its lowest level since May 2, 2011.
On April 8, 2011, TLT slid to a pre-market bottom of 89.64, its lowest point since February 18, 2011.
On February 10, 2011, TLT retreated to a late morning bottom of 88.14, its lowest mark since April 7, 2010.
On April 7, 2010, TLT slumped to an early morning bottom of 87.30, its lowest reading since September 20, 2007.
VIX is probably the best-known measure of equity index implied volatility, which is synonymous with investors' fear of an upcoming bear market.
VIX ascended to a Wednesday opening high of 13.35, descended to a Thursday 2:31 p.m. low of 12.28, and retreated to a Friday 11:13 a.m. bottom
of 11.99, its lowest point since August 5, before touching a Monday opening low of 12.41, climbing to a Monday 3:33 p.m. high of 13.22, and closing
Monday up 91 cents at 13.10.
VIX has apparently been forming a pattern of higher lows from a multi-year bottom which occurred at 11.05 on March 14, 2013, and which will
signal an upcoming top for global equities probably during the next several months just as the VIX bottom of 9.39 on December 15, 2006 followed by
several higher lows for VIX presaged the general U.S. equity peaks in the second half of 2007.
On November 7, 2013, VIX rallied to a 3:36 p.m. peak of 14.14, its highest point since October 30, 2013.
On October 15, 2013, VIX rallied to a post-4:00 p.m. peak of 18.67, its highest level since October 9, 2013.
On October 9, 2013, VIX rallied to an 11:24 a.m. peak of 21.34, its highest mark since June 24, 2013.
On August 5, 2013, VIX slid to a post-4:00 p.m. bottom of 11.83, its lowest mark since March 15, 2013.
On June 24, 2013, VIX surged to a 10:05 a.m. peak of 21.91, its most elevated reading since December 31, 2012.
On March 14, 2013, VIX slid to a post-4:00 p.m. bottom of 11.05, its most depressed reading since February 26, 2007.
On December 28, 2012, VIX soared to a post-4:00 p.m. peak of 23.23, its most elevated point since June 14, 2012. Because VIX trades until 4:15
p.m., it reflected the entire post-closing slump for the S&P 500.
On June 14, 2012, VIX climbed to a 9:45 a.m. peak of 24.81, its highest mark since June 13, 2012.
On June 13, 2012, VIX surged to a 3:30 p.m. peak of 24.93, its highest level since June 5, 2012.
On June 4, 2012, VIX rallied to a 10:09 a.m. peak of 27.73, its highest point since December 12, 2011.
On December 8, 2011, VIX climbed to a late afternoon peak of 30.91, its highest reading since November 29, 2011.
On November 25, 2011, VIX climbed to an early morning peak of 34.77, its most elevated level since November 21, 2011.
On November 21, 2011, VIX rallied to a late morning peak of 35.29, its highest mark since November 17, 2011.
On November 17, 2011, VIX surged to a 1:52 p.m. peak of 36.46, its highest point since November 1, 2011.
On November 9, 2011, VIX soared to a late afternoon peak of 36.43, its most elevated reading since November 1, 2011.
On November 1, 2011, VIX soared to a noon peak of 37.53, its highest mark since October 7, 2011 and a gain of more than 53% within 1-1/2 trading days.
On October 4, 2011, VIX climbed to a 10 a.m. peak of 46.88, its highest level since August 9, 2011.
On August 9, 2011, VIX rallied to a post-Fed-announcement high of 47.56.
On August 8, 2011, VIX soared exactly 50% to its intraday peak of 48.00, its highest reading since May 21, 2010.
On May 21, 2010, VIX soared to an early morning peak of 48.20, its most elevated mark since March 10, 2009.
The S&P 500 Index descended to a Wednesday 9:34 a.m. bottom of 1760.64, its lowest point since November 8, and then surged to a
Friday pre-closing high of 1798.22, climbed to a Monday 9:37 a.m. peak of 1802.33, a new all-time zenith, retreated to a Monday 3:32 p.m. low
of 1788.00, and closed Monday down 6.64 at 1791.54.
Continuing a two-decade pattern, the S&P 500 has achieved a new all-time zenith above its October 11, 2007 top of 1576.09,
but it won't be a new all-time high after adjusting for inflation, just as the 2007 top was above the 2000 peak but not after adjusting for inflation.
Within the next few years, the S&P 500 will slump below its March 6, 2009 bottom of 666.79, just as the 2009 bottom was below the 2002
bottom and its 2002 bottom was lower than its 1998 bottom, thereby continuing another long-term pattern.
Eventually, its dividend yield will climb above six percent, just as U.S. equities overall have done during all prior eras of stagnation.
On November 7, 2013, the S&P 500 slumped to a 3:51 p.m. bottom of 1746.20, its lowest reading since October 24, 2013.
On October 9, 2013, the S&P 500 retreated to an 11:24 a.m. bottom of 1646.47, its lowest mark since September 6, 2013.
On August 30, 2013, the S&P 500 slid to a 3:54 p.m. bottom of 1628.05, its lowest level since August 28, 2013.
On August 28, 2013, the S&P 500 retreated to a 9:35 a.m. bottom of 1627.47, its most depressed point since July 5, 2013.
On June 24, 2013, the S&P 500 slumped to a 12:23 p.m. bottom of 1560.33, its most depressed reading since April 22, 2013.
On April 18, 2013, the S&P 500 slid to a 2:58 p.m. bottom of 1536.03, its lowest mark since March 5, 2013.
On February 26, 2013, the S&P 500 slid to an 11:48 a.m. bottom of 1485.01, its most depressed level since January 22, 2013.
On December 28, 2012, the S&P 500 slid to a 3:50 p.m. bottom of 1401.58, its lowest regular-hours mark since December 5, 2012. At 16:14:45 in
the after-hours session, the S&P 500 as measured by SPY at 138.55 would have traded at 1387.61, its most depressed point since November 28, 2012.
On December 5, 2012, the S&P 500 retreated to a 10:55 a.m. bottom of 1398.23, its lowest reading since November 28, 2012.
On November 28, 2012, the S&P 500 slid to a 10:10 a.m. bottom of 1385.43, its lowest level since November 20, 2012.
On November 16, 2012, the S&P 500 slid to an 11:29 a.m. bottom of 1343.35, its most depressed point since July 26, 2012.
If you admire the old monk, the 61.8% Fibonacci retracement is 1346.11, which was slightly broken to the downside on November 16, 2012.
On July 25, 2012, the S&P 500 slid to a 10:57 a.m. bottom of 1331.50, its lowest level since July 24, 2012.
On July 24, 2012, the S&P 500 slumped to a 2:30 p.m. bottom of 1329.24, its lowest point since July 12, 2012.
On July 12, 2012, the S&P 500 slid to a 10:46 a.m. bottom of 1325.41, its lowest reading since June 28, 2012.
On June 28, 2012, the S&P 500 slumped to a 2:31 p.m. bottom of 1313.29, its most depressed level since June 26, 2012.
On June 26, 2012, the S&P 500 slid to an 11:10 a.m. bottom of 1310.30, its lowest mark since June 25, 2012.
On June 25, 2012, the S&P 500 slumped to a 12:00 p.m. bottom of 1309.27, its lowest point since June 12, 2012.
On June 12, 2012, the S&P 500 slumped to a 10:39 a.m. bottom of 1306.62, its lowest level since June 6, 2012.
On June 4, 2012, the S&P 500 slid to a 1:25 p.m. bottom of 1266.74, its most depressed reading since January 5, 2012.
On December 19, 2011, the S&P 500 slid to a late afternoon bottom of 1202.37, its most depressed mark since November 30, 2011.
On November 25, 2011, the S&P 500 slid to a late afternoon bottom of 1158.66, its lowest level since October 10, 2011. If you count the
pre-market session, the futures-equivalent low at 8:36 a.m. was 1149.60, which would mark its cheapest price since October 6, 2011.
On October 4, 2011, the S&P 500 plummeted to a 10 a.m. bottom of 1074.77, its lowest mark since September 1, 2010.
On August 27, 2010, the S&P 500 retreated to a mid-morning bottom of 1039.70, its lowest point since July 7, 2010.
On July 1, 2010, the S&P 500 slid to a late morning bottom of 1010.91, its lowest mark since September 4, 2009.
GDX, a fund of primarily large- and mid-cap gold mining shares, rose to a Wednesday post-open high of 24.08, dropped to a Wednesday
1:30 p.m. low of 23.75, and then climbed to a Friday 9:41 a.m. peak of 24.70, its highest mark since November 7, before sliding to a
Monday 3:34 p.m. bottom of 23.58, its lowest mark since November 8, and closing Monday down 46 cents at 23.67.
On November 8, 2013, GDX slumped to a 9:50:37 a.m. bottom of 23.50, its lowest reading since October 16, 2013.
On October 28, 2013, GDX climbed to an 11:26 a.m. peak of 26.91, its highest point since September 20, 2013.
On October 16, 2013, GDX descended to a 10:55 a.m. bottom of 23.22, its lowest level since October 15, 2013.
On October 15, 2013, GDX slid to an 8:00:13 a.m. pre-market bottom of 22.71, its lowest point since June 28, 2013. Later the same day, it
touched a 9:31 a.m. regular-hours low of 22.88.
On September 18, 2013, GDX soared to a 3:50 p.m. peak of 28.64, its highest reading since September 3, 2013.
On August 27, 2013, GDX rallied to a post-open peak of 31.35, its highest level since April 12, 2013.
On July 5, 2013, GDX plummeted to a 1:22 bottom of 22.79, its lowest mark since June 28, 2013.
On June 26, 2013, GDX plunged to a 4:00 p.m. bottom of 22.21, its most depressed reading since December 5, 2008.
On April 9, 2013, GDX surged to an 11:59 a.m. peak of 36.29, its highest mark since April 2, 2013.
On March 21, 2013, GDX rallied to a 1:46 p.m. peak of 38.58, its highest point since February 27, 2013.
On February 26, 2013, GDX rallied to an 11:57 a.m. peak of 39.29, its highest reading since February 19, 2013.
On February 7, 2013, GDX ascended to a 10:54 a.m. peak of 42.94, its highest level since January 30, 2013.
On January 30, 2013, GDX rallied to a 10:39 a.m. peak of 43.14, its highest mark since January 24, 2013.
On January 22, 2013, GDX rallied to a 2:18 p.m. peak of 45.92, its highest point since January 15, 2013.
On January 15, 2013, GDX rallied to an 11:52 a.m. peak of 45.96, its highest reading since January 3, 2013.
On January 2, 2013, GDX surged to an 8:06 a.m. pre-market peak of 47.75, its highest level since November 30, 2012.
On November 23, 2012, GDX rallied to a 12:52 p.m. peak of 49.00, its highest point since November 14, 2012.
On November 8, 2012, GDX surged to a 3:15 p.m. peak of 51.82, its highest mark since November 1, 2012.
On October 31, 2012, GDX surged to a 3:55 p.m. peak of 52.97, its highest level since October 17, 2012.
On October 17, 2012, GDX rose to a peak of 53.40, its highest level since October 9, 2012.
On October 5, 2012, GDX climbed to a 10:22 a.m. peak of 54.64, its most elevated reading since September 21, 2012.
On September 21, 2012, GDX rallied to a 9:41 a.m. peak of 55.25, its highest point since March 2, 2012.
On May 16, 2012, GDX slid to a 1:51 p.m. bottom of 39.08, its most depressed reading since September 2, 2009.
On February 29, 2012, GDX rose to a 9:38 a.m. peak of 57.91, its most elevated price since February 2, 2012.
On February 2, 2012, GDX rallied to an 11:07 a.m. peak of 57.94, its highest point since December 9, 2011.
On December 1, 2011, GDX rose to a mid-morning peak of 61.01, its most elevated mark since November 16, 2011.
On November 8, 2011, GDX rose to a 1 p.m. peak of 63.69, its highest level since September 21, 2011.
On September 21, 2011, GDX rallied to a mid-afternoon (pre-Fed) peak of 66.90, just below its all-time high.
On September 9, 2011, GDX climbed to a mid-morning all-time zenith of 66.98.
On December 7, 2010, GDX rallied to an early morning peak of 64.62, a new all-time high.
Today's main topic is oy.
So, Ruchele, what is it with the stock market? It seems always to be going up, never to be going down. Is this what they call the new paradigm or something?
Oy vey, the stock market. Your father, may he rest in peace, should only hear the way we talk about it, as though we're mavens. Since when are you watching the stock market every day, Izzy? Is business slow?
And what about you? Don't you have laundry or cooking to do?
Listen, you know I can be the baleboste when I have to be, but I also understand from money better than you, even if you can't admit it. You told me yourself that the guys at the JCC are always hockin a chainik about this stock and that stock, but they have no idea about the big picture. I've been watching SPY and IWM and I notice that after leading the way for a long time IWM is finally oysgemutshet, it's hit the wall, hasta la vista, baby.
Hey, watch it, Ruchele, you're not supposed to be so clever. Sure, I saw that IWM is maybe kaput, it can't even get back to its October high while SPY keeps marching on like a good soldier and all you hear about on the radio is new highs for the Dow. So, nu? How come none of those well-dressed shmendriks on cable TV ever talk about it when they give their shpiels?
They're paid to encourage you to listen to their schtick, not to get you to think. From thinking they don't know bupkes. Once you start thinking, you might think maybe about changing the channel to the food network where they keep noshing on all those treife delights. Or maybe you'll try that travel channel where, no matter what is happening in the rest of the world, they go to the beaches once an hour. I know what you do when you think I'm not keeping an eye on you. The less they wear, the more you watch.
So why are these smiling geniuses with their fancy ties and those cufflink tchatchkes always wrong? Does wearing a goyishe Brooks Brothers suit make you a schlemiel?
Kibitzing for hours about new highs for the Dow is exciting. Talking about small-cap divergences is not. So no one finds out about anything important, and then a year or two later they're left wondering how they lost so much money.
My cousin Malka told me she and her husband finally got "back into the market" last week.
That tells you everything you need to know about your farshtunken cousin Malka. Since when are you schmoozing with them? They almost foreclosed on that gorgeous mansion they bought in 2006 with money they didn't have. Remember how we walked in the front door and it was such a huge deal about looking way, way up that schmaltzy wallpaper to the ceiling reaching the top floor? They act as though they're better than everyone else, because they can schmooze directly with the Almighty as soon as they enter their house. I'm also not convinced that their fifth or tenth refinancing is going to save them in the end. It's not kosher to rely on borrowing money to reach prosperity. You want to know what else I think of your cousin Malka and her side of the family?
Sure, why stop now when you're just getting started? I was about to plotz from listening to how much you love them. What other wonderful sweet things do you have to say about Malka?
Don't ask.
I won't ask, and you won't tell. What else is on your mind, bubele?
I was studying gold, silver, copper, and the shares of their producers, and I saw something which made me take a closer look.
What, they have a sale on jewelry at Macy's?
That too, but I was tracking the shares of the producers of these metals, and they've been making higher intraday lows even on days when the metals are lower. That doesn't happen too often, and when it does, it usually means that a significant rally is getting closer.
Don't ever let them hear you talking this way at the club, or the yentas will start rumors that you're in charge around here and I'm just a pretty face.
You mean I'm not in charge?
Of course you are, dear, but we'll get all kinds of tsuris if we let people know about it. We'll never hear the end of it. Now is this higher low thing really important?
By itself it doesn't mean a whole lot, but when you combine it with the likelihood that we're getting divergences for general equities, then it becomes a lot more significant, since that is when companies related to commodity production really start to outperform just about everything else. As the well-known favorites stop going higher, people will become increasingly eager for alternatives. If you think about all of our friends and neighbors, they haven't bought any mining shares or energy securities. They keep kvetching about wanting yield, yield, yield, because some macher at the shul has ten or twenty thousand shares of some high-dividend schlock. We know that if everyone can't stop thinking about yield, then it's going to be nothing but tsuris for the yield chasers.
Are you calling me a yield chaser?
Heaven forbid! A skirt chaser you are, definitely, but not a yield chaser. If there's one thing you know, it's not to follow the crowd.
And what about the VIX?
Those people on TV have the chutzpah to talk about the VIX as though they really understand it, but their brains are gornisht helfn. It's not as simple as a low VIX showing dangerous complacency and a high VIX indicating too much fear. When VIX starts making several higher lows even as general equities are making higher highs, then we know the Rothschilds and the Rockefellers are buying insurance just in case everything starts going to gehenna.
So what is it with these mining shares already? It seems to be that back in June everyone was worried about how much lower they might go, and a few people thought maybe they'd rebound sharply. Now the fear is somewhat less about a collapse, but no one thinks we can have a strong uptrend.
You hit the nail on the head. Everyone is sure that mining shares can't possibly move a lot higher during the next several months, so that becomes a much more likely scenario. We had huge fund outflows, so lots of people would be hurt by a strong move higher. People have given up buying calls, so almost no one would benefit by a strong short-term surge. As we know, the market will do whatever will benefit the fewest people.
So what do you think of 2013?
It reminds me a lot of 2000 and 2007, or 1972 if you can remember that far back.
Now you're questioning my memory?
My point was that once in awhile, the stupidest schmu--I meant schmendriks--act as though they're Joseph and we should be bowing down to them. Whenever they do works, or seems to work, until suddenly everything turns to schmutz all at once. If everyone you know seems to be making money, then you can be sure that they'll be losing it soon enough, and that whatever seems to be black is really white. My only surprise is that someone else hasn't figured this out after all this time. Everyone is confident that the Dow and the S&P 500 will keep going up, so they're getting set for a major decline. Everyone knows that you shouldn't own mining shares, so they'll become the biggest winners. As my brother Shlomo keeps trying to tell us, when everyone you don't know seems to be right, everything you supposedly know must be wrong.
Shlomo's got nothing on you. A smarter woman than you maybe doesn't exist. Whether that's good or bad I haven't figured out yet.
Take care already.
--Steve