From Wikipedia:
The black swan theory or theory of black swan events is a metaphor
that describes an event that comes as a surprise, has a major effect,
and is often inappropriately rationalized after the fact with the
benefit of hindsight. The theory was developed by Nassim Nicholas Taleb to explain:
- The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology
- The non-computability of the probability of the consequential rare events using scientific methods (owing to the very nature of small probabilities)
- The psychological biases that make people individually and collectively blind to uncertainty and unaware of the massive role of the rare event in historical affairs
The "black swan theory" refers to unexpected events of large
magnitude and consequence and their dominant role in history. Such
events, considered extreme outliers, collectively play vastly larger roles than regular occurrences.
At the age of 60 now, and with more than 35 years experience studying and trading the financial markets, I view the recent surge in violence within Iraq as the "rebirth" of a potential Black Swan. I think you would be hard pressed to find many Wall Street advisers or research analysts who had predicted imminent civil war in Iraq, let alone what is actually happening now which looks to me like a major transformation of this country and potentially the entire region. In my book, we are just in the first chapter of a new dawn of disasters in the Middle East, and Wall Street investors appear blind to the potential negative consequences to U.S. stock prices immediately ahead and over the next several quarters, at least.
Weekly Chart Sell Signals were triggered by my computer trading system last week in the following stocks and indexes: BA, COST, DHI, DIS, DD, F, HON, JBHT, KR, LEN, MUB, PEP, RTH, SWC, UTX, VIA, WM, XAL (Airline Index), and HGX (Housing Index). Five of these stocks are "blue chip" components of the Dow Jones Industrial Average. Please see Boeing (BA) and DuPont (DD) weekly charts below.
Gold/Silver stocks were the number one performing stock group last week, with the closely-watched Philadelphia Gold/Silver Stock Index (XAU) posting a 6.46% gain on the week.
On Tuesday, June 3rd, I reported in this column that daily chart buy signals had been triggered that day by my computer trading system in several major Gold/Silver stocks and indexes. The June 3rd closing prices for those stocks and indexes are posted here along with closing prices from yesterday, June 13th. Please refer to my column dated June 3rd for more details.
June 3rd June 13th Change
Agnico Eagle Mines (AEM) $30.48 $33.29 + 9.22%
Gold/Silver Mining Index (XAU) $84.98 $92.30 + 8.61%
Barrick Gold (ABX) $15.97 $16.98 + 6.32%
Endeavour Silver (EXK) $ 3.90 $ 4.84 +24.10%
First Majestic Silver (AG) $ 8.44 $ 9.59 +13.63%
Fortuna Silver Mines (FSM) $ 3.93 $ 4.63 +17.81%
Gold Mining Share ETF (GDX) $22.37 $24.11 + 7.78%
Newmont Mining (NEM) $22.82 $23.40 + 2.54%
In my view, the rally in Gold/Silver mining shares is just getting started.
After posting its lowest close since 2007, the CBOE VIX Index (also known as the "Fear Index") rebounded 13.51% last week to 12.18. And just like with Gold/Silver stocks, I think the rebound in VIX is just getting started.
In the interest of full disclosure, I am long Gold/Silver stocks (AG, EXK, GDXJ) in my managed accounts and also short the S&P 500 Index with the double-short SDS ETF.
In the interest of full disclosure, I am long Gold/Silver stocks (AG, EXK, GDXJ) in my managed accounts and also short the S&P 500 Index with the double-short SDS ETF.
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| Boeing (BA) Weekly Chart with Computer-generated Buy & Sell Signals |
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| DuPont (DD) Weekly Chart with Computer-generated Buy & Sell Signals |
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