Hot and Fresh Charts 6-26-2019

Hot and Fresh Charts 6-26-2019 — with David Moadel hey everybody welcome to looking at the
markets with David Modell I’ve got so many charts for you today so many
thoughts in my head hey look if you like this video share it with a friend share
it with your grandmother here we go with the charts okay we’re gonna start with
the dollar and the dollar index is vomiting it is well below the 200-day
moving average for the dollar and you know the dollar had its strongest year
in a long time last year in fact in 2018 the US dollar outperformed practically
every global asset class so to me that was an outlier it was just a fluke
that’s not the normal behavior of the dollar normally normally it just
deteriorates in value but I think the year just ended rather poorly for stocks
and global equities so yeah the dollar had a great year last year but I didn’t
expect it to continue and I’d look it’s breaking down below a key trend line
here and I expect further weakness ahead and that’s good for asset classes that
are measured against the US dollar typically such as gold and Bitcoin hmm
which have both been doing pretty well lately I’m not gonna focus on Bitcoin
too much in this video I will probably in future videos but let’s take a look
at some anti fiat non-governmental commodities here we’re talking about
gold and silver look at that gold to silver ratio ninety two point seventy
three that’s insane it was crazy at 80 hey that rhymes huh it was wild at 90
and at ninety two point seventy three it is just nuts it’s out of control if you
are gutsy you can short gold and go long silver if you just want to play the
ratio itself without actually playing gold or silver by itself or you could
just rebalance your portfolio you know maybe divest yourself of gold a
little bit and replace that gap with silver in your portfolio if you want to
or just go along silver hey why not I cannot tell you what to do or what not
to do it’s your own decision folks but these are things to think about thoughts
in my head that I’ve got to express yes speaking of gold now after the most
recent FOMC Federal Open Market Committee also known as the Fed meeting
it talking about gold rocketed up to its highest level since 2013 pretty bullish
in terms of the price action and if that dollar crumbles that could be even more
bullish for gold I like it I’m like in spot gold and it’s outperforming most of
the g10 currencies so gold beaten the heck out of fiat money all over the
world especially the big currencies the big reserve currencies very nice that I
don’t mind if gold outperforms fiat money that’s fine with me
now let’s look at the commodities speaking of gold and silver – S&P 500
ratio yeah commodities are ticking upwards especially gold and silver but
commodities overall are still darned cheap compared to the rather richly
priced S&P 500 so if you think that just because gold and silver went up recently
in the last month that that doesn’t mean that they’re overvalued in the long term
they are quite nicely valued a good value compared to the S&P 500 right now
and how long can the the ratio of commodities to stocks stay this low well
judging by the past it didn’t stay low this low for very long I’m talking in
terms of years this is cyclical this is secular the S&P 500 index versus their
earnings talk about a divergence between valuations and reality okay these two
lines will meet eventually they did before and they will meet again they
don’t stay divergent especially this divergent forever now what is more
likely to happen think about it our earnings more likely to just
increase all the way up here you know is the economy that great or is it more
likely that stock prices will come down to meet reality to meet actual corporate
earnings which you know I but remember these stocks are supposed to represent
the value of companies that’s what’s supposed to happen or will they meet in
the middle either way if they meet in the middle or if this white line comes
down to the blue line then that means that the stock market has to come down
unless this blue line comes all the way up to meet the white line which seems a
little bit unlikely as I see it of course they could be wrong another
divorce another divergence in you know reality
versus stocks the Purchasing Managers Index PMI which is another indicator of
the health of the US economy way down here falling falling and the stock
market going up hmm again which you know are they likely to meet in the middle
that means stocks would have to come down or will the Purchasing Managers
Index just keep going up and up and up until it meets it until it meets stock
valuations is that realistic I’ll let you decide another recession in possible
reset no guarantee possible recession indicator you know I’d like to talk
about bond yield spreads okay and inversions when the short-term bond
yield goes above the long-term bond yield then we’re in bizarre land bizarre
land and we’re talking about the five-year to three-month yield curve
inversion and it’s inverted it’s been inverted for a little while
now and when that happens hey recessions in the past weren’t far off typically 12
to 18 months off okay now I know past performance is no guarantee of future
results but history may not repeat but it does tend to rhyme often times like I
just rhymed I’m full of rhymes today what can I tell
you yeah also what matters is the percent of inversions in the yield curve
all right because you don’t just have the five
year and you know that this one over here is the five-year three-month you’ve
also got a ten year in two year you’ve got the ten year in three month you’ve
all got all kinds of yield spreads and how many of those are inverted well this
that’s what this measures for the thirty ten seven five three two year and one
year or twelve month three month one month and fed funds rate it calculates
all of these and then determines how many of those are inverted well plenty
of them are according to Bloomberg and when that happens at least the last
couple of times it might go a little longer maybe a year maybe eighteen
months and then things start to happen if you know what I mean and what this
could mean is that perhaps we’re near the end of the expansion the business
expansion cycle so you know we are far far I know they circled this one but I
want you to take a look at this one it’s in light blue because it’s still in
progress it could keep going but it’s yeah tired for the longest one in recent
history probably since any of us were born watching this how much longer could
it go well statistically not too much longer the expansion of the economy the
expansion of the stock market can only go on for so long there has to be a
reversion to the mean at some point how much longer can this bull live and it’s
a tired old one isn’t it and I know I’ve shown this one before but it’s been
updated and just want to let you know that the Fed itself and Morgan Stanley
and the Bureau of Economic Analysis all expect inflation to go up and up and up
in the future that’s what they expect hey so do I as the data as the US dollar
deteriorates and finally what is dr. copper tell us they call it dr. copper
but when there’s a divergence between copper
and stock prices that’s usually not a great sign because when copper prices
are just deteriorating that’s oftentimes a sign of the economy having problems
the underlying economy I know copper isn’t everything it’s just
one indicator of many but I’ve shown you others today they’re not looking too
great and this one shows a divergence copper generally speaking going down and
equities going up equities don’t care but they’ll have to because again these
two lines always meet not necessarily in the middle but they always meet sooner
or later whoo there we go hey if you like this do me
if they ever give it a thumbs up let me know that you like these overall macro
charts all right I put out other videos that show you know what’s going on in
terms of specific stocks but these are macro charts just to get you an overall
view of what’s going on in the economy so you can position yourself accordingly
all right hey if you haven’t subscribed to my channel yet what the heck you
doing go ahead subscribe right now do it do it okay and hit that notification
bell and if you want some coaching if you want some help planning your trading
or investing you can contact me by email for the coaching David Modell at all right thanks a lot for listening I’m out of breath and watching
I’ll talk to you again soon

7 thoughts on “Hot and Fresh Charts 6-26-2019”

  1. DXY has had alot of strength for a long time David.Next 2 – 5 years go Gold and Silver ?

  2. Yeah, what's with all the divergences….and nothing really happening yet…..hmmmmmm.It couldn't be market makers….or ??? I do like the charts, just am so tired will remember nothing. Thank you.

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