Semiconductors

AMD taggin resistance, ASML approaching support. I'm looking for a bull trap to spring on technology. Tech has been positively corelated with interest rates, except when rising bonds are bearish for stocks. Traders have aggressively run up technology stocks on the assumption of a Goldilocks drop in interest rates.

Added Roscan

Finally opened a position in Roscan, one of the stocks I waited to add after missing the run. There is hard support around 33 cents, but I sense the bottom may be in for gold mining shares and gold. Relatedly, I have calls on TLT.

Salt Keeps Running

Vulcan still trades at a discount of more than 50 percent to its holdings in Red Moon, essentially giving the rest of the company a negative valuation. The discount has been consistent since I first mentioned it in February, but with RMK quadrupling since then, VUL has also nearly quadrupled.

China Shuts Down Newspaper, Points to Beam In the GAE's Eye

USG = U.S. government, separate from the people and the nation

GAE = Globalist American Empire

BigTech isn't USG, but it is clearly part of the same ruling class imposing itself on the American people and foreign nations. Here is China pointing out it is not doing anything different from what BigTech did when it shut down Parler. And they are absolutely correct, the reasoning for shutting down Apple Daily is the same as shutting down Parler once adjusting for local context.

Breitbart: China Compares Apple Daily Shutdown to Big Tech Blocking Parler

Chinese state media on Friday claimed the destruction of pro-democracy newspaper Apple Daily in Hong Kong was no different than American tech companies colluding to shut down the social media platform Parler.

It also compared the Apple Daily shutdown, preceded by hundreds of police officials raiding its offices, to the U.S. Federal Communications Commission (FCC) taking action against media outlets that violate broadcast standards.

China’s state Xinhua news service railed against Western politicians for “smearing” China, demonstrating their “hypocrisy and double standards,” and interfering in China’s “internal affairs” by criticizing the crackdown on Apple Daily, raided by Hong Kong police last week and driven out of business.

BTC Still Going

There was no Sunday massacre, BTC survived the night. Overall the pattern remains bearish and a break is still likely in the near future. I'm also looking for a pullback in the technology sector of the stock market to give context. On the bullish side, the longer BTC can hold above support and not make a new low, the more likely this could become a busted pattern. Bulls want to see a series of higher lows start developing.

Nasdaq 100 Ratio to Gold and Copper

Top incoming.

Gartman Turns Bullish

Sunday Massacre for BTC?

The bar count gave me a symmmetical breakdown date of June 27. I'm not trading around this specific date, only noting it for future reference. I expet a breakdown any day now and will maintain the outlook as long as there's no bullish chart development. Still holding various July puts based on the bearish forecast.

BTC Linear Chart

Who's Buying?

Weak volume.

Bull or Bear Market in Miners, Semiconductors

Bullish and bearish patterns tend to fail in the wrong market. In a bull market, expect the bullish setups to succeed. Expect the bearish setups to fail. Buying the dips works. In a bear market, it's the reverse. Bearish setups succeed, bullish ones fail, and selling the rips is profitable.

Below is a mining stock that came across my radar again today. I think there's downside risk to around 90 cents assuming this is a bull market. I can also see (not a forecast) what could be a head-and-shoulders top forming. I've seen this pattern on other mining shares and it gave me pause, but if this is still a bull market most of these patterns should resolve higher.

Similarly, Taiwan Semiconductor could be basing for a breakout later this year. You can imagine if it breaks resistance and moves higher, the current pattern could evolve into a cup. Or it could be setting up for a downturn this summer with a breakdown through horizontal support. If it did break the target is $67, conveniently where a price gap exists (blue line). Since 2009, these patterns typically do not complete or if they do, bottom long before reaching their potential target (exceptions being some sectors such as energy and commodity producers). That will change if and when a bear market begins.

Let's go back to BTC. Since this is the crypto leader, completion of this top would mean the bear market is in the early stage, rather than this being the late stage of a correction. Failure of this topping pattern would be a powerfully bullish signal though.

Here is Dogecoin showing the pattern in TSM above, with mulitple instances of it all resolving higher.

Finally here is ARKK. When a bear market begins, it typically starts in the lower quality names. If the bull market that began in 2009 is finally undergoing a topping process, look for assets such as ARKK to never recover. If the bull market is still going strong, then ARKK should eventually make new all-time highs.

Short Targets for July

If tech pulls back, my main targets are ROKU, SMH and SE. I'm also short energy, Brazil and financials today, long TLT.

Who's Ready for a Plunge in the Yen?

Looking for Imminent Tech Pullback

Looking for a pullback to start anytime.

BTC Bounced Off January Low

Dip buyers prevented a bigger breakdown on Tuesday. Nothing has changed though. The bearish forecast stays until BTC clears $42,000

How Should China Respond to U.S. Monetary Drugs

iFeng: 面对危机 当美国“嗑药”般撒钱时我们该怎么办？

The American madness of "spending money" never ends? Fu Peng: It's like "taking drugs"

Overwhelmed by water, the United States seems to never look back on its quantitative easing (QE) journey. Since the outbreak of the new crown epidemic early last year, in order to prevent the economy from sinking deeper and deeper into the "epidemic quagmire", the United States has introduced a series of fiscal stimulus plans since March last year. Entering this year, after Biden took office, he has further accelerated the pace of America's "big water release".

Statistics show that in January of this year, Biden, who had just taken office, announced a large-scale stimulus package of US$1.9 trillion in his speech; at the end of March, Biden announced another US$2.25 trillion fund plan and US$1.8 trillion family. Plan; At the end of May, Biden threw another $6 trillion government expenditure budget proposal for fiscal year 2022. In addition, last year, the scale of the US fiscal stimulus plan for more than a year has broken the ten trillion dollar mark, and the continuous crazy "spending money" behavior has also been rated as "epic" release by the outside world.

The cost of the United States' repeated "release of water" has become apparent. According to the latest data released by the US Department of Labor, the US CPI in May increased by 0.8% month-on-month and 5% year-on-year, which was not only higher than market expectations, but also set the largest increase since August 2008, which is approaching the economic crisis.

Faced with concerns about the global economic crisis caused by the "explosion" of US inflation indicators, Fu Peng believes that such changes are the most important lessons learned from the world economy in the past decade. "The currency system established after World War II actually has a huge flaw. Just to say that this flaw is that all of us are not willing to face it and face it in ordinary times or even in times of crisis." "Fu Peng used the word "drug" to describe it. He stated that the behavior of the United States can be described in simple words as-whenever there is a crisis, it will take drugs. "Take the medicine first. As for the future, I'll talk about it later."

What is "drug use"? In Fu Peng’s explanation, “drug use” means left-handed stimulus and a mismatch in the right-hand, which eventually led to the failure of the central bank’s monetary policy in the original monetary system. “So nominal interest rates have been lying on the floor, but the actual inflation high."

"Taking drugs" to the end: the rich will always be rich, the poor will always be poor

Fu Peng believes that the essence of Keynesianism is to generate excessively low real interest rates through a combination of "left and right hands", thereby breeding asset bubbles. And in such a cycle, there will be a kind of appearance, that is, "As long as we carry it over, the crisis will not be a crisis." "As long as there is an asset bubble, the original asset recession can be carried over, and as long as it has passed, the crisis will not be a crisis." As to whether this logic holds up, Fu Peng argues dialectically that "it is right and wrong", but In his view, looking at this question in different time dimensions, the answer will be completely different. For the moment, he said, “We can’t wait for people to die before we solve them. We save people and hold them back first, but you may not consider a problem, what are the negative effects it brings.”

What are the negative effects? From public information, it can be seen that the United States continues to "self-heel", which has caused the central banks of many developed economies such as Europe and Japan to substantially expand their balance sheets. Emerging markets have frequently cut interest rates. Some regions and countries have even entered negative interest rates. The world has to collectively under the influence of the United States. Towards "easy". On the other hand, inflation represented by commodity prices is happening, and Biden’s fiscal stimulus has also caused all domestic prices in the United States to rise, but the people are still spending wildly. As Sam Bullard, senior economist at Wells Fargo Bank, pointed out, “It seems that every time Individuals are trying to increase prices."

However, in Fu Peng's view, if this loose farce is not restrained, it may trigger a social crisis that is more terrifying than the economic crisis. "The big problem of the global economy is no longer discussing the'economy' itself. The big problem facing the world now is the'social' problem. Constant strong stimulus has brought too low real interest rates and capital costs, and the profit-seeking nature of capital will As a result, some people have made huge profits from investing in assets such as houses, causing a serious gap between the rich and the poor in society and distorting all classes of society. He believes that with such reciprocity, a phenomenon will appear in society: after every crisis, the rich will always be rich, and the poor will always be poor.

Therefore, Fu Peng warned that “the drug will not go on in the end, and the road of'taking drugs' cannot go on forever.”

Relying on "release of water" to pass on risks? The trend of U.S. stocks is evidence

Since continuous "release of water" is not a wise move, why does the United States not mean to stop at all? To this question, Fu Peng gave a direct answer-"Don't dare to collapse."

Fu Peng pointed out that after Powell took over as chairman of the Federal Reserve in 2018, although the U.S. economic data represented by U.S. stocks looks good, the actual economic structure is already very poor. The body of this person is still very poor, and because this person's body simply cannot hold the real interest rate level before the financial crisis, although he is out of the ICU, his body is still deteriorating."

This kind of internal and external contradiction has also become the deep-seated reason for Fu Peng's eyes that the United States continues to pass on risks to the world. "This structural problem cannot be solved by the United States itself."

The trend of US stocks may be proof. "U.S. stocks will see a V-shaped reversal soon after every plunge. As long as the volatility of U.S. stocks rises, it will quickly hit a record high, almost every year." Why does this happen? Fu Peng's interpretation of this is that whenever asset prices are ready to clear, the Fed will use lower nominal and real interest rates to hold back the assets, so that the assets will not be destroyed. "As someone said, there are two things in this world that cannot be broken. One of them is the US stock market."

For this kind of "holding" behavior, Fu Peng believes that the reason why the U.S. dare not let U.S. stocks collapse is precisely the reason why the monetary system is essentially unable to resolve the contradictions between the economy and society. Questions to think about.

Similar to Fu Peng’s point of view, this description has recently come from Robert W. Baird & Co. The investment strategy analyst Ross Mayfield seems to have been confirmed. When evaluating the CPI data that just hit a record high, he believes that "such data is not enough to make the Fed retreat, and the latter-the overall picture-is important." Ross Mayfield said, "If the economy is strong, people go shopping, Retail sales are high, and prices are rising because of demand, which is good for the stock market."

How to deal with it?

During the summit, Zhu Guangyao, the former deputy minister of the Ministry of Finance, gave a response from the perspective of the United States and the world when talking about the issue of "water release" in the United States or the economic crisis that will be caused. He said that with regard to the Fed’s “release of water”, one should not only see its impact on the flood of market liquidity, but also its effect on economic stability. “In this kind of crisis, it is necessary to stabilize the society and stabilize the economy. Vigorous macroeconomic measures need to be taken."

On the other hand, regarding the spillover influence of the Fed, Zhu Guangyao specifically pointed out the need for policy coordination by countries around the world, especially the G20 countries. "I think this aspect needs to be urgently strengthened. We are all in the same boat, working together to deal with the crisis, and negotiate and cooperate to deal with the new challenges facing the global economy in the post-epidemic period, so as to achieve a sustainable, strong, balanced and global economy. Inclusive growth is the goal of the G20."

Ma Guangyuan, an independent economist and deputy director of the Central Economic Commission of the China Democratic National Construction Association, took a firm and positive attitude in the face of the challenge of "discharging water." In his view, there is no need to worry too much about the crisis, "After every major crisis, the global industry will usher in a reshuffle. This crisis has just given the Chinese economy the unprecedented opportunity to top the global digital intelligence economy. ."

In Ma Guangyuan’s view, China’s layout in digital technology construction is already in a leading position in the world, and China’s manufacturing industry just happens to provide the best application scenarios for the digital intelligence economy, and the core of the global supply chain industry chain system is gradually shifting to China. These backgrounds have brought a rare window of development for China's digital intelligence economy.

China could have decoupled anytime it wanted to stop relying on the U.S. consumer market. Similarly, the U.S. has had 14 years to face its strucutural problems, has also done nothing to address them.

If Bears Take Over

If the bears take over...

Violent line on Amazon will fall.

Bombs Away on BTC

Funny enough, when I first looked at the left shoulder I counted from the peak to the eventual move into the head formation and came up with an inverted break of the neckline on June 22. Today. I didn't think that was valid and looked at the whole formation instead, and came up with June 27. This is why I have July puts.

The Beginning or The End for Semiconductors?

The bulls say a new bull market started in March 2020 and some Teradyne cleared its 2000 high, but has since pulled back. Bullish above the blue horiztonal, but I'm bearish on semiconductors and tech in general.

Taiwan Semiconductor. Everyone knows they have a monopoly. Everyone knows theres's a shortage of chips that is ongoing. Chart looks like a correction for now, but below $107.46 the outlook turns decisively bearish in the intermediate-term. Bonus is the Taiwan ETF. TSM is about 22 perecnt of the fund. The top-5 are all tech stocks with about 35 percent of the fund's assets. Tagging aa long-term resistance line.

Finally, the most liquid semiconduictor ETF.

Put-Call Ratio and SKEW

Investors have to pay a premium for puts, but it looks supply-driven rather than demand-driven.

BTC Still on Schedule

Symmetry still holding up. Normally, I do not expect technical analysis to work like clockwork, particularly with government and central bank intervention going on. Cryptos are a retail-heavy free market though, which translates into a market more emotionally-driven. Technical analysis is ultimately human psychology in action. Counting from when the left shoulder began to form (broke through the neckline) to when it broke higher and began forming the "head" of this head-and-shoulders pattern, I count 39 bars. A perfectly symmetrical breakdown would occur on June 27.

I only point out the symmetry as a curiousity. I'm unaware of any technical value in it, what's more meaningful is the height of the shoulders are of similar size.

In any event, I expect BTC will break lower by early July. I expect a rapid and sizable decline after $30,000 falls. I have accumulated out-of-the money July puts on MSTR, COIN and SQ.

Quantum Internet

New internet woven from ‘spooky’ quantum links could supercharge science and commerce

By year’s end, drivers in the largest U.S. metro areas—including, largely thanks to Figueroa, the suburbs of New York City—may unwittingly rumble over the tenuous strands of a new and potentially revolutionary network: a “quantum internet” stitched together by entangled photons like those in Figueroa’s lab.

Billions of dollars have poured into research on quantum computers and sensors, but many experts say the devices will flourish only when they are yoked to each other over long distances. The vision parallels the way the web vaulted the personal computer from a glorified typewriter and game console to an indispensable telecommunications portal. Through entanglement, a strange quantum mechanical property once derided by Albert Einstein as a “spooky distant effect,” researchers aim to create intimate, instantaneous links across long distances. A quantum internet could weld telescopes into arrays with ultrahigh resolution, precisely synchronize clocks, yield hypersecure communication networks for finance and elections, and make it possible to do quantum computing from anywhere. It could also lead to applications nobody’s yet dreamed of.

Whales Turning: 2008 Regime Wins Again

For now, there is no regime change to inflation. The 10-year/2-year interest rate ratio has reversed. Charts only tell us current trend, not the future. It's possible this is a fakeout before the breakout, but if not...I won't say gold has topped yet, but gold will have topped as long as this chart is going down and/or until the market remonetizes gold. My bias is towards shorting commodities, not gold, as the former have a far greater downside if the yield curve flattens.

For background on the 10yr/2yr ratio, I looked at this chart before in Waiting For Regime Change and August 2011 inverted: Here Comes the Rate Shock and YCC.

If this turn in the chart is sustained, not only will inflation be transitory, but I'll probably be discussing Chinese yuan devluation within twelve months. At which point the central banks lose control and the U.S. dollar has its Moonshot, or we do another round of inflation.

As for timing, the Fed started doing repo in September 2019, only nine months after the Fed threw in the towel on rate hikes. The market was teetering by February 2020 even without coronavirus. Cycles should accelerate into the end game, thus I don't expect it'll be too long before markets start blowing up. This feels a bit like 2008 given how many people are all in on inflation trades and certain that there's no risk of deflation (crashing commodity prices).

More stimulus and Fed intervention are the obvious catalysts for a bear market short-circuit, but two things on my mind. One, higher prices have turned consumers off. Buying intentions for appliances and homes are below the pandemic low of March 2020. Intervention that raises prices could kill the economy, at which point it's not clear which way things shake out because a deflationary crash is better for banks. The Fed can prevent bank failures from deflation. It can't save bank valuations from stagflation. Two, will Congress pass a stimulus? It is likely there would be calls for more stimulus, but unclear what a rapidly-approaching-lame-duck-status Baizuo administration can get passed. Finally, consider it all in context of markets. Speculators (nearly everyone now) assume more intervention is coming. It is priced in. The market could price it out, then back in (correction). Or the market is wrong, and prices go far lower than would be considered a credible forecast today.

I'm not fully positioned for this yet. Bears have been blown out at every hint of a shift in market sentiment. This time I expect there will be more of a pullback, but whether it's the start of an honest to God bear market, something that hasn't happened since 2008, I cannot say. Whatever is coming, more specualtive assets such as Bitcoin should lead the way lower. Until Bitcoin breaks $30,000, it's possible this is simply a fakeout. The S&P 500 Index lost its 50-day moving average late on Friday though...and not to strain too hard, but the chart looks similar to early 2020 with a gap lower followed by a new all-time high that quickly gives way to selling...

UPdate: Adding more charts. Here's the copper-gold ratio and 10-year yield, highlighting why I'm not as bearish on gold.

Reflation Over? A Look at the Copper-Gold Ratio

Update:

Setups Getting Blasted

I remain long gold miners, but expect better setups coming for investors with cash.

Short Inflation Hysteria

Fact Checkers Greatest Fail Yet

Back in March I asked Are Fact Checkers the Dumbest People or Liars?. I leaned towards liars, but...

Revolver News published an article, Unindicted Co-Conspirators in 1/6 Cases Raise Disturbing Questions of Federal Foreknowledge, in which it lays out the case for the Capitol Riot on January 6 being an FBI operation. As with many Islamic terror plots in recent years and the supposed plot to kidnap the Michigan governor last year, when you dig into in the story you'll find FBI undercover agents and FBI informants are in all the key positions of a conspiracy (such as bombmaker, weapons acquirer, main plotter). The plot is set up and only requires a patsy to go along with it. Agents and informants hunt around for mentally unstable, lonely, low intelligence people, befriend them and then surprise: the great FBI has thwarted another terror plot it concocted. The same is true of the January 6 riot at the Capitol. If you look into the indictments, none of the "bad guys" who did the more serious crimes are being charged. Why? Well, most likely they are undercover FBI agents or informants. Tucker Carlson ran the story on his show Tuesday and the story went viral. With the official narrative blowing up, into the breach once more go the fact checkers!

What do you think? Are fact checkers liars, the dumbest people, or some combination of both?