The week ahead - weather, markets crashing, darker days coming, gold, silver and the miners soar...
Looks like another storm "may" impact the east coast... perhaps inducing some investors to think Nat Gas is a buy, again, as happened with the last storm... But, also a good chance that the short term nature of the prior event might have many fewer players chasing the puck around the ice this time around... IF the weather turns out to be an issue: Even ZH notes the impact on the trade from the last event...
Meteorologists Closely Monitor ???????"Big Storm" For Next Week
Markets ? The Dow (chart below) hit a bottom on January 24th, then was up 2800 points in the next two week... until Thursday... and, in two days, gave back 1000 points... pushing it back below the 200 MA... and leaving it with an ugly downward vector that should make Monday's open "interesting"...
The market in crash mode is a bit of news that generates its own gravity... But, not the only reason to be pessimistic just now... Supposedly, Russia might invade Ukraine "any minute now"... and, the truckers in Canada have successfully shut down trade across the border... and the politics is getting heated. Biden, apparently, has told Trudeau to use force to resolve the issue... which is made more interesting because there's a US truck convoy that will be heading from LA to DC... "soon"... and word is, the pols are in a panic.
We've already seen far too much of what Biden and the Democrats are capable of when they're panicking... But, the point here... nerves are already on edge... and it seems pretty unlikely that the whiff of panic in the air is likely to help settle the ratcheting up of volatility in the markets...
One thing I did note in my chart work today... is that on Friday that hard bottom and turn higher in the HL chart... is apparent in the chart of almost every major gold and silver mining stock... but true ONLY in the PM space... not so much in the base metals... which are down. And, poking at that more... I noted a sudden shift occurred on Friday... that brought silver and JUNG, usually sort of an opposing pair, into sudden alignment in making a move higher together. in sync... But, not just them... all the PM miners were higher... and they moved higher in sync WITH the VIX... stocks down... gold, silver and the miners higher... following the latest bad news on inflation...
So, as I'd said I expected might occur... "miners plunging with stocks"... is NOT happening... rather than the opposite. Which also says... the trade that is occurring may or may not be related to the "end of the Basel III manipulation" trade... but it is almost certainly occurring now as a flight to safety in a "hedge against systemic risk" trade... PAIRED WITH a concurrent and DRAMATIC shift back to recognizing that gold and silver are an inflation hedge. That happened... ON FRIDAY... so, it might take a day or two for people to catch on to what just happened...
It's actually hard to imagine a worse outcome for stocks... with a "doom loop" in bonds... making a better situation for gold, silver and the miners than we've seen since... maybe 1971... as inflation is FINALLY recognized... while the market now clearly see's the Fed WILL raise rates enough to derail the stock market bubble... but cannot raise them enough to actually tame inflation... And, the long running suppression trade in gold and silver appear they are going to end now... ready or not...
Here's the Dow, having bounced a couple of times, now looking like it may commit to doing its swan dive...
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