The Entry Points
The new President is at again on Twitter bragging about “his” bull market in stocks. We never once heard him applauding President Obama for “his” magnificent bull market in stocks. And Donald has a long, long way to go to catch up to the superb performance of Barack’s bull market of 235%, measured from his Inauguration day. So far the “Trump” bull market has returned a measly (relatively) 12%. And even though the stock market actually bottomed in March 2009, we are barraged with the stupid comments (theories) about the “new bull market”. These theories are based upon the supposedly enormously positive policies from – anyone….anyone….Donald Trump. And the President himself is Trumpeting his stock market bull-horn about this great achievement. Honestly it’s tough to even keep up with the logic, but we’ve heard all of it. So today he boasted, “Since November 8th, Election Day, the Stock Market has posted $3.2 trillion in GAINS and consumer confidence is at a 15 year high. Jobs!” Of course the problem is, the next big selloff in stocks (which at this point is hard for most people to believe actually happens) will then bring in a new set of theories. You know, the ones which are currently being shunted aside as not being meaningful, because the trend in stocks (for now) is up. And while the stock bull market turns 8 years old on Monday, the sentiment is hitting levels not seen in decades. The Dow had 12 straight record high closes – the highest since 1987, a year which started out well, but ended with a thud. And the venerable Investors Intelligence sentiment survey hit its’ highest level since 1987 also. So those theories about a (normal and needed) correction (the new Trump “correction”) will then blame the exact same guy. The MSM will have a field day with that one. And do you think that guy will be on Twitter taking credit for the selloff. Yeah right.
There was also the bragging and the total show of incompetence about the “new US$ bull market” (which bottomed in March 2008). This “new”$ bull market was being credited to – anyone….anyone….Donald Trump. And it was Trumpeted loudly by the President himself actually, not just his posse. The reason why I said it was Trumpeted, is because they were incompetently blowing the $ bull-horn right into a huge resistance area in the Dollar. It was right when this post from November 28th of last year laid out my intermediate term concern for a much needed correction in the $ (well beforehand). And then recently believing that trading below 99.40 with ending action would be “required” to see the first high probability area for a low in this $ correction. Many have concluded that since President Trump does not want a strong $, then the bull market is over. But his “wishes” are meaningless (for now). The correction (re-accumulation) in the $ continues to progress, and it is only serving to strengthen the bull market. In any uptrend, when they get frothy but not terminal, a reaction/backup is needed to clear out some weak hands. And there were a lot of incompetent (weak handed) buyers of the $ at the recent highs.
A strong $ by itself is not at all helpful to gold. But the next big rally in the $, once it’s well above the 103.82 high, will be accompanied by a lot of “bad news” and volatility out of Europe, along with a falling Euro. That situation will not only be bullish for the US$, but also for gold. Both of those markets are slowly starting to sync up, but it will ebb and flow. Today the $ is at 8 week highs, and the people short the $ are starting to get nervous. The $ strength is not helping gold. Part of the problem is that the Yen/gold relationship is still fairly solid, but even this is also changing, slowly. This correlation will eventually break apart, we just need to get there first. But the breakdown in the correlation is a process, just like most market occurrences, and gold will sense it well in advance. The $ will be the last one to hold up against gold (and other commodities). All of the toilet paper fiat currencies are in terminal decline.
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