View profile

GoldFix Weekly Report: How RobinHood Rips Off Retail

HouseKeeping:
  • We’ve picked up a bunch of Founder subscribers for which we are grateful. Founders also will have full access to Masterclass Archives starting next week.
  • This week we are giving a free premium trial look at the weekly reports. This report, special reports, and our Masterclass Sunday session archives will be for Founding / Premium members only soon afterwards. If you receive a notice of a free trail and are already a premium member, disregard it.
SECTIONS
  1. Market Summary: weekly recap
  2. Precious: analysis
  3. Reports: research
  4. Technicals: active trading levels
  5. Tools: educational videos and research
  6. Charts: related markets
  7. Calendar: next week
To New Subscribers: The weekend report is intended to be more like a Sunday paper with different sections. Barron’s of old comes to mind. Best digested in sections between life’s responsibilities if you can.- VBL
SPECIAL:
MasterClass Pay for Order Flow- ZOOM: This is a 2 hour University level discussion with Vince and Founder subscribers from August 1st.
1. Market Summary
Two weeks ago stocks were stuck in a narrow, downward range, and the prevailing consensus was for continued declines. Yet, at that time, Goldman laid out a contrarian case predicting a market-wide melt up into the end of October and the last two months of the year. Here’s what Goldman said 2 weeks ago. From that GoldFix Weekly Report:
…So, the ‘stagflation’ narrative seems to be morphing back into a ‘reflation’ narrative — something similar to what we were experiencing when the economy first ‘reopened’ last spring.
In retrospect, Goldman was absolutely correct, and one look at the S&P over the past two weeks shows an unbroken meltup from a low of 4,340.
Goldman correctly called what could happen. Here, from us is at least part of the why it is happening.
Stock Buybacks To the Rescue
Tapering is viewed as bearish for sure. But the bond market is discounting (to the extent it still is reliable as an indicator at all), that the tapering will cause a recession soon thereafter. Tapering is likely slated to start in November. This is also the same time that many companies will restart their stock buybacks.
Buyback Season is Post Earnings Season
Buyback Season is Post Earnings Season
The net result? The moment Fed support is lessened, the corporate bid enters. The dip is being bought. We noted this in September.
VBL
@StockCats Stock buybacks begin the day tapering does.
What Changed?
So stagflation fears are now shrinking. The bond market is saying, recessionary fears are growing. And stocks are saying, a recession will bring either more QE or less Tapering. As we know… recession fears are bullish for stocks. So nothing to see here. The Fed has everything under control it seems.
The market right now trusts the Fed is doing its job. Last week market behavior sounded an alarm at Zerohedge that the Fed was possibly making a policy error. We agreed. Here’s what we said then:
Short term rates rise and long term rates drop simultaneously. Taken together, this is called a curve “flattening”. More specifically, a “bear flattening”. It implies the market is getting concerned that the Fed may be raising rates too soon. a.image2.image-link.image2-242-342 { padding-bottom: 70.595690747782%; padding-bottom: min(70.595690747782%, 241.43726235741445px); width: 100%; height: 0; } a.image2.image-link.image2-242-342 img { max-width: 342px; max-height: 241.43726235741445px; } If that is true, then a Fed that slows down the economy too soon would cause a recession unnecessarily. Hence Zerohedge correctly characterizes this as risk of a “policy error”. If it is an error, The Fed may reverse a rate decision, or pay attention to the bond market and not hike as soon as participants think they will. Finally, the long bond may just organically reverse and come to terms with the Fed’s behavior as ok. Or they just might not raise rates! But right now, it is most definitely saying a hike will hurt the economy, and thus stocks . -Full Report
What changed? Fair question. Bonds didn’t change. But Stocks rallied this week. This means the interpretation of the bond market behavior must adjust.
Stocks started rallying fiercely even with the bond market flattening. Had stocks continued to drop like in the previous 2 weeks, we’d be even more concerned about tapering into recession. But this week undid that for now.
Sector Performance
Sector wise, big companies did better than smaller companies. Healthcare did very well. Oil and Gas exploration stocks performed abysmally as ESG and reduced carbon mandates result in smaller capex for new oil. Which is also why Exxon rallied. They are spending less on exploration and more on buybacks.
Financials did poorly, possibly in part from the bond market implying less profits on their lending business. Aerospace stocks also did poorly. Maybe Tesla’s gain is their loss?
Some highlights and our comments/observations:
  • All time highs and the best October since 2015
  • October’s performance also best month since November 2020.
Zerohedge
Zerohedge
  • Tesla topped the $1,100/share level. - Time to think of Tesla as more than a car company, Between Hertz, Uber, Crypto, Energy, and SpaceX they are possibly being played as a movie theater where you pay up for subsidized carbon-free popcorn. A mall of ESG services. 2
  • Tesla has now gained over $300 billion in market cap in the past two weeks - the increase alone is bigger than the market cap of 90% of S&P500 companies
  • Microsoft briefly surpassed Apple as the world’s most valuable company intraday
  • Today’s ramp is even more bizarre because it takes place as bonds are also bid. - in a QE environment which we have had now for years this makes perfect sense as the Fed buys bonds and the proceeds are used by banks to buy stocks. But in a removal/tapering of QE it has to imply recessionary fears.
  • And just to make the day especially confusing, the recent trend in rising breakevens broke with a bang, as 10Y BEs slumped while real rates jumped in the past two days.- Not traditionally good for Gold. That means the rising bonds and subsequent dropping yields are happening in conjunction with abating inflationary fears. This encourages CTAs and other macro bears to sell Gold.But not the end of the bull market either.
  • Elsewhere, the dollar roared by the most in a month.- reflection of abating inflationary fear and consistent with the rising rates at the shorter end of the bond curve
  • But while it was a good month for stocks, it was a stellar month for cryptos.- Closure in regulatory news, launched ETFs, no FUD, some good news, and bets that the end of the year will be a ramp higher like last year are playing out
GoldFix WatchList
Complete Watchlist Here
Crypto Saturday Session
2. Precious
Last week we described what the 4 main drivers would be for Gold and Silver for the remainder of the year were. Here they are:
  1. Government Policy- The Fed’s economy to break
  2. Seasonality- “Sell season” gives way to “Buy season”
  3. Bitcoin Competition- New kid on the mainstream block with old school ideals
  4. Basel 3 Implementation- Deleveraging of the markets
That is what played out all week. Gold tracked the dollar and bonds in tandem. The first 3 drivers were out in full force. Sellers were lurking. Remember those CTAs we tentatively identified who sold it last week and trampled themselves to cover on the highs? They were back looking to get short again.
Who was selling? Everyone. Bears of all types.
  • Taper bears who look at the end of QE as bearish- it just isn’t.
  • Transitory Bears who see the inflation as transitory- not sure based on the rents and other sticky changes not even baked in yet.
  • Prop firms and bank desks front-running the rotation out of GLD and into the BITO ETF- that is silly, but it is happening.
  • Short term funds CTAs betting on slowdown- the new retail, and they will be right until they are wrong. But they can push a market for months.
  • Finally, real seasonal pressures as many RIA guided investors close positions for end of year squaring- happens every year and is a precursor to the next buy season.
For the first half of the week things were going fine. But on the 27th Gold started acting poorly. The dollar started dumping. Good for Gold right? You’d think. But it did not do much. We noted it here with a sadly prescient comment at the moment the gold market failed to rally that day. On 10/27 at 10:18 a.m. we noted to followers:
VBL
this is a problem. even though it makes no sense on surface.
second dive sub 200 dma.. CTAS will pile on and Banks will let them

DESPITE weak dx and flat to firmer bonds... ask yourself, what happens if dxrallies? crap
Then on the 28th Gold started to catch a bid when the dollar really started to wash out again. (picture below). It broke through $1800 and got just below the infamous teens. But something ominous happened.
Gold just stopped, chopped, and dropped. We quickly surmised that the option expiration had a part in it. But the open interest was not large. That was wrong. It was a very suspicious slam.
Silver, did not move down as much when Gold dropped all week. This was further confirmation that the sellers were macro guys playing the first 3 drivers above. Bitcoin is taking flows from GLD, not SLV.
Bonds were strong, which is good for gold during these QE days. But break evens were dropping. This was a sign of the end of QE and not good for Gold perception. Basically the bond rally was also accompanied with a reduction in inflation fears.
Then it hit us. CTA types like to sell at moving averages, and the 200 day moving average came in right where the selling was. In fact the market was ripping right through it on multiple days. Conclusion? Weak buyers were buying the strength, and the bigger seasonal players were selling it to them.
Sure enough, Friday’s data came out showing moderation in inflationary risk. The bond market moved higher in the back end but lower again in the front end. The dollar ramped up relentlessly. Gold suffered. But given the ferocity of the Dollar move, Gold could have done worse. Buy season is coming.
3. Reports
4. Technical Analysis
Report Excerpts Courtesy MoorAnalytics.com
GoldFix Note: Michael Moor’s work is used by oil refiners, hedge funds, and large investors.
Gold
On a lower timeframe basis: The decent break above $1,729.9 (-4 tics per/hour) has brought in $85.6 of strength. The decent trade above $1,746.0-6.3 has brought in $69.2 of strength. The decent trade above $1,755.8 (-1.5 tics per/hour) has brought in $59.7 of the strength we were looking for above. The trade above $1,771.4 has brought in $44.1 of strength. These are OFF HOLD. Friday we basically held exhaustion above at $1,810.2-3.1 with a $1,815.5 high and rolled over. This is ON HOLD.
TECHNICALLY BASED MARKET ANALYSIS AND ACTIONABLE TRADING SUGGESTIONSMoor Analytics produces technically based market analysis and actionable trading suggestions. These are sent to clients twice daily, pre-open and post close, and range from intra-day to multi-week trading suggestions. www.mooranalytics.com
Bitcoin
On a lower timeframe basis: I NOTED: The break back below $65,520 is a WARNING we may see decent pressure which could last for days/weeks. We have seen $7,665 so far. This bias will be negated with trade above $67,680. We were in a bullish correction against the move down from the highs and held exhaustion at $63,945 with a $63,865 high and rolled over $6,010 to start a lower timeframe bearish move to the downside. NOTE: IF this is a bearish correction against the move up from $40,085, there are areas of possible corrective exhaustion to contend with on the way down at $57,950- 6,395 (which we are currently holding with a $57,855 low)…
Natural Gas
NOTE: on a very macro basis, the break above 4904 projects this upward $3.38, which could take roughly 14 months to attain (we are in the 3 rd month). Trade at 4058 would negate this projection.
5. Podcasts
GoldFix
During the week Gold had an options expiration. An “article” was published Thursday that expiration saying Gold could go up now that the evil manipulators were done ‘keeping it under $1800. At 6:52 a.m. Friday morning Vince had something to say about it on this GoldFix podcast. Gold dropped $23.00 the next 2 hours. Imagine if you had bought based on that idea? The point he was making: Be careful of salesmen and narratives. Here’s a 2 minute clip reposted with the main point.
WARNING: Strong Language, Profanity
VBL
CLIP: Trading Narratives to watch for 2/n (profanity) https://t.co/s35b5peP5A
VBL
GoldFix Clip: Revaluation? Comment on @wmiddelkoop observation in forthcoming @WallStreetSilv interview 1 of 2 https://t.co/vagiJy5jsw
Bitcoin Brief
6. Charts
All Charts by TradingView.com
Gold
Silver
All Charts by TradingView.com
Dollar Index
Bonds
Bitcoin ETF
7. Calendar
Some of the upcoming week’s key data releases and market events
MONDAY, NOV. 1
  • 9:45 am Markit manufacturing PMI (final) Oct. – 59.2
  • 10 am ISM manufacturing index Oct. – 61.1%
  • 10 am Construction spending Sept. – 0.0%
TUESDAY, NOV. 2
  • 10 am Homeownership rate Q3 – 65.4%
WEDNESDAY, NOV. 3
  • 8:15 am ADP employment report Oct. – 568,000
  • 9:45 am Markit services PMI (final) Oct. – 58.2
  • 10 am ISM services index Oct. – 61.9%
  • 10 am Durable goods orders (revision) Sept. – 1.8%
  • 10 am Core capital goods orders (revision) Sept. – 0.6%
  • 10 am Factory orders (revision) Sept. – 1.2%
  • 2 pm Federal Reserve statement
  • 2:30 pm Fed Chair Jerome Powell press conference
THURSDAY, NOV. 4
  • 8:30 am Initial jobless claims (regular state program) Oct. 30 – N/A
  • 8:30 am Continuing jobless claims (regular state prog) Oct. 23 – N/A
  • 8:30 am International trade deficit Sept. – -$73.3 billion
  • 8:30 am Productivity (SAAR) Q3 – 2.1%
  • 8:30 am Unit labor costs (SAAR) Q3 – 1.3%
FRIDAY, NOV. 5
  • 8:30 am Nonfarm payrolls Oct. – 194,000
  • 8:30 am Unemployment rate Oct. – 4.8%
  • 8:30 am Average hourly earnings Oct. – 0.6%
  • 3 pm Consumer credit Sept. – $14 billion
Main Source: MarketWatch
Zen Moment:
GOOD DOG: Toilet paper hoarder gets a surprise.
RELATED CONTENT
8. Disclaimer
Disclaimer: Nobody is telling you to do anything here. Anybody who tells you to do something without first intimately knowing your personal situation is irresponsible at best and manipulative at worst. Worse, anyone who acts on other people’s opinions without first doing an inventory of their own situation shouldn’t be surprised if they lose money.
Don’t miss out on the other issues by VBL
Did you enjoy this issue? Yes No
VBL

Capital markets recap, commentary, and analysis for evolving traders

You can manage your subscription here.
In order to unsubscribe, click here.
If you were forwarded this newsletter and you like it, you can subscribe here.
Created with Revue by Twitter.