China's central bank cut interest rates again today to "support sustained and healthy development of the real economy". According to the People's Bank of China (PBoC), the benchmark
lending and deposit interest rates are lowered by 0.25 percentage point as of May 11, 2015, "to create a neutral appropriate
monetary and financial environment for economic structural adjustment
and restructuring and upgrading".
This should be good for Chinese stocks, right? And maybe for stock prices globally, right? Maybe so!
We know now with certainty that several major central banks around the globe are actually buying stocks to boost their economies and ward off potentially negative deflationary forces. The Swiss National Bank (SNB) is the latest entry into this "select" group, buying at least $10 billion in equities in the first quarter alone this year.
More good news for stocks, yes? For Swiss citizens, let's hope the SNB's equities purchases turn out better than its Euro$ purchases. Just a quick reminder, in the January 2015 revaluation of the Euro against the Swiss Franc, the Swiss National Bank lost at least $75 billion on its Euro$ reserve position!
In the interest of full disclosure, I re-entered Gold and Silver mining shares from the long side on Thursday and Friday of last week (AG, CDE, EXK, PPP, and SSRI), and then at mid-day on Friday (May 8th) I shorted the S&P 500 Index (using the double-short SDS ETF). For every $1 in mining shares bought long, I shorted $4 in the S&P 500 Index.
The first and most important question to ask is: Does my computer system support this trade?
The answer is "mostly yes", but there is no perfect storm here in favor of my specific hedged position! While I soon expect a re-allocation of investment assets away from equities into "cash" alternatives and precious metals, I am more than a little concerned about the apparent expansion in purchases of equities by central banks and also the extraordinary pace of corporate share buy-backs. Are central banks really omnipotent? And how much longer can corporate treasurers continue to borrow for the express purpose of buying their own shares while sacrificing business related capital expenditures? And what happens to financial markets when investors realize that central bankers are NOT omnipotent, and corporate treasurers can only support their own stocks with buybacks as long as bond investors will let them (NOT much longer)! And how will investors react when Greece defaults (which could happen as early as this Tuesday, May 12th, when 750 million Euro$ is due)?
Is the day of reckoning close at hand? All I can say is that the throttle for stock investors appears to read "Flank Speed" despite the fact that an "Iceberg" lies just ahead!
I've included several key charts today which clearly support my aggressive (contrarian) investment stance here. The charts below reflect ALL buy & sell signals from my computer-based trading system.
1. Russell 2000 Index - Daily, Weekly, and Monthly Charts
2. Silver ETF (SLV) - Daily, Weekly, and Monthly Charts
3. Gold ETF (GLD) - Daily, Weekly, and Monthly Charts
The answer is "mostly yes", but there is no perfect storm here in favor of my specific hedged position! While I soon expect a re-allocation of investment assets away from equities into "cash" alternatives and precious metals, I am more than a little concerned about the apparent expansion in purchases of equities by central banks and also the extraordinary pace of corporate share buy-backs. Are central banks really omnipotent? And how much longer can corporate treasurers continue to borrow for the express purpose of buying their own shares while sacrificing business related capital expenditures? And what happens to financial markets when investors realize that central bankers are NOT omnipotent, and corporate treasurers can only support their own stocks with buybacks as long as bond investors will let them (NOT much longer)! And how will investors react when Greece defaults (which could happen as early as this Tuesday, May 12th, when 750 million Euro$ is due)?
Is the day of reckoning close at hand? All I can say is that the throttle for stock investors appears to read "Flank Speed" despite the fact that an "Iceberg" lies just ahead!
I've included several key charts today which clearly support my aggressive (contrarian) investment stance here. The charts below reflect ALL buy & sell signals from my computer-based trading system.
1. Russell 2000 Index - Daily, Weekly, and Monthly Charts
2. Silver ETF (SLV) - Daily, Weekly, and Monthly Charts
3. Gold ETF (GLD) - Daily, Weekly, and Monthly Charts
 |
| Russell 2000 Index Monthly Chart with Computer-based Buy & Sell Signals |
 |
| Russell 2000 Weekly Chart with Computer-based Buy & Sell Signals |
 |
| Russell 2000 Daily Chart with Computer-based Buy & Sell Signals |
 |
| Silver ETF (SLV) Monthly Chart with Computer-based Buy & Sell Signals |
 |
| Silver ETF (SLV) Weekly Chart with Computer-based Buy & Sell Signals |
 |
| Silver ETF (SLV) Daily Chart with Computer-based Buy & Sell Signals |
 |
| GOLD ETF (GLD) Monthly Chart with Computer-based Buy & Sell Signals |
 |
| Gold ETF (GLD) Weekly Chart with Computer-based Buy & Sell Signals |
 |
| Gold ETF (GLD) Daily Chart with Computer-based Buy & Sell Signals |
