Special Bonus Edition

Aug 3, 2017

Dear Daily Pfennig Readers…

It’s our pleasure to be here, filling in for our dear friend Chuck Butler while he’s on vacation.

To introduce ourselves, we’re Mary Anne and Pamela Aden. We write The Aden Forecast letter, and we’ve been happily doing this for 36 years. We cover the major markets, and we’ll be posting some of our articles here.

We also publish Dow Theory Letters. It was founded by the late great Richard Russell and, along with a team of top notch writers, we’ve carried on with his work. Some of these articles will also be posted during Chuck’s R&R.

And finally, you’ll also be receiving articles from GoldChartsRUs, our weekly trading service. Here our top trader covers what to buy, what to avoid, what to do about it and much more.

We hope you enjoy our articles while Chuck’s away.

Chuck’s transition is complete and we’re proud to have him as part of our Aden Group.

Best regards and here’s to good markets,

Mary Anne & Pamela Aden

Today we’re posting an article from Dow Theory Letters.

Rich Man, Poor Man

By Richard Russell

MAKING MONEY: The most popular piece I’ve published in 40 years of writing these Letters was entitled, “Rich Man, Poor Man.” I have had dozens of requests to run this piece again or for permission to reprint it for various business organizations.

Making money entails a lot more than predicting which way the stock or bond markets are heading or trying to figure which stock or fund will double over the next few years. For the great majority of investors, making money requires a plan, self-discipline and desire. I say, “for the great majority of people” because if you’re a Steven Spielberg or a Bill Gates you don’t have to know about the Dow or the markets or about yields or price/earnings ratios. You’re a phenomenon in your own field, and you’re going to make big money as a by-product of your talent and ability. But this kind of genius is rare.

For the average investor, you and me, we’re not geniuses so we have to have a financial plan. In view of this, I offer below a few items that we must be aware of if we are serious about making money.

Rule 1COMPOUNDING: One of the most important lessons for living in the modern world is that to survive you’ve got to have money. But to live (survive) happily, you must have love, health (mental and physical), freedom, intellectual stimulation — and money. When I taught my kids about money, the first thing I taught them was the use of the “money bible.” What’s the money bible? Simple, it’s a volume of the compounding interest tables.

Compounding is the royal road to riches. Compounding is the safe road, the sure road, and fortunately, anybody can do it. To compound successfully you need the following: perseverance in order to keep you firmly on the savings path. You need intelligence in order to understand what you are doing and why. And you need a knowledge of the mathematics tables in order to comprehend the amazing rewards that will come to you if you faithfully follow the compounding road. And, of course, you need time, time to allow the power of compounding to work for you. Remember, compounding only works through time.

But there are two catches in the compounding process. The first is obvious — compounding may involve sacrifice (you can’t spend it and still save it). Second, compounding is boring — b-o-r-i-n-g. Or I should say it’s boring until (after seven or eight years) the money starts to pour in. Then, believe me, compounding becomes very interesting. In fact, it becomes downright fascinating!

In order to emphasize the power of compounding, I am including this extraordinary study, courtesy of Market Logic, of Ft. Lauderdale, FL 33306. In this study we assume that investor (B) opens an IRA at age 19. For seven consecutive periods he puts $2,000 in his IRA at an average growth rate of 10% (7% interest plus growth). After seven years this fellow makes NO MORE contributions — he’s finished.

A second investor (A) makes no contributions until age 26 (this is the age when investor B was finished with his contributions). Then A continues faithfully to contribute $2,000 every year until he’s 65 (at the same theoretical 10% rate).

Now study the incredible results. B, who made his contributions earlier and who made only seven contributions, ends up with MORE money than A, who made 40 contributions but at a LATER TIME. The difference in the two is that B had seven more early years of compounding than A. Those seven early years were worth more than all of A’s 33 additional contributions.

This is a study that I suggest you show to your kids. It’s a study I’ve lived by, and I can tell you, “It works.” You can work your compounding with Muni-bonds, with a good money market fund, with T-bills or say with five-year T-notes.

Rule 2: DON’T LOSE MONEY: This may sound naïve, but believe me it isn’t. If you want to be wealthy, you must not lose money, or I should say must not lose BIG money. Absurd rule, silly rule? Maybe, but MOST PEOPLE LOSE MONEY in disastrous investments, gambling, rotten business deals, greed, poor timing. Yes, after almost five decades of investing and talking to investors, I can tell you that most people definitely DO lose money, lose big time — in the stock market, in options and futures, in real estate, in bad loans, in mindless gambling, and in their own business.

RULE 3RICH MAN, POOR MAN: In the investment world the wealthy investor has one major advantage over the little guy, the stock market amateur and the neophyte trader. The advantage that the wealthy investor enjoys is that HE DOESN’T NEED THE MARKETS. I can’t begin to tell you what a difference that makes, both in one’s mental attitude and in the way one actually handles one’s money.

The wealthy investor doesn’t need the markets, because he already has all the income he needs. He has money coming in via bonds, T-bills, money market funds, stocks and real estate. In other words, the wealthy investor never feels pressured to “make money” in the market.

The wealthy investor tends to be an expert on values. When bonds are cheap and bond yields are irresistibly high, he buys bonds. When stocks are on the bargain table and stock yields are attractive, he buys stocks. When real estate is a great value, he buys real estate. When great art or fine jewelry or gold is on the “give away” table, he buys art or diamonds or gold. In other words, the wealthy investor puts his money where the great values are.

And if no outstanding values are available, the wealthy investors waits. He can afford to wait. He has money coming in daily, weekly, monthly. The wealthy investor knows what he is looking for, and he doesn’t mind waiting months or even years for his next investment (they call that patience).

But what about the little guy? This fellow always feels pressured to “make money.” And in return he’s always pressuring the market to “do something” for him. But sadly, the market isn’t interested. When the little guy isn’t buying stocks offering 1% or 2% yields, he’s off to Las Vegas or Atlantic City trying to beat the house at roulette. Or he’s spending 20 bucks a week on lottery tickets, or he’s “investing” in some crackpot scheme that his neighbor told him about (in strictest confidence, of course).

And because the little guy is trying to force the market to do something for him, he’s a guaranteed loser. The little guy doesn’t understand values so he constantly overpays. He doesn’t comprehend the power of compounding, and he doesn’t understand money. He’s never heard the adage, “He who understands interest — earns it. He who doesn’t understand interest — pays it.” The little guy is the typical American, and he’s deeply in debt.

The little guy is in hock up to his ears. As a result, he’s always sweating — sweating to make payments on his house, his refrigerator, his car or his lawn mower. He’s impatient, and he feels perpetually put upon. He tells himself that he has to make money — fast. And he dreams of those “big, juicy mega-bucks.” In the end, the little guy wastes his money in the market, or he loses his money gambling, or he dribbles it away on senseless schemes. In short, this “money-nerd” spends his life dashing up the financial down-escalator.

But here’s the ironic part of it. If, from the beginning, the little guy had adopted a strict policy of never spending more than he made, if he had taken his extra savings and compounded it in intelligent, income-producing securities, then in due time he’d have money coming in daily, weekly, monthly, just like the rich man. The little guy would have become a financial winner, instead of a pathetic loser.

RULE 4: VALUES: The only time the average investor should stray outside the basic compounding system is when a given market offers outstanding value. I judge an investment to be a great value when it offers (a) safety; (b) an attractive return; and (c) a good chance of appreciating in price. At all other times, the compounding route is safer and probably a lot more profitable, at least in the long run.

RICHARD RUSSELL

1924-2015

Special Bonus Edition

Aug 2, 2017

Dear Daily Pfennig Readers…

It’s our pleasure to be here, filling in for our dear friend Chuck Butler while he’s on vacation.

To introduce ourselves, we’re Mary Anne and Pamela Aden. We write The Aden Forecast letter, and we’ve been happily doing this for 36 years. We cover the major markets, and we’ll be posting some of our articles here.

We also publish Dow Theory Letters. It was founded by the late great Richard Russell and, along with a team of top notch writers, we’ve carried on with his work. Some of these articles will also be posted during Chuck’s R&R.

And finally, you’ll also be receiving articles from GoldChartsRUs, our weekly trading service. Here our top trader covers what to buy, what to avoid, what to do about it and much more.

We hope you enjoy our articles while Chuck’s away.

Chuck’s transition is complete and we’re proud to have him as part of our Aden Group.

Best regards and here’s to good markets,

Mary Anne & Pamela Aden

Today we’re posting an article from The Aden Forecast.

U.S. dollar: A bad year, so far

The U.S. dollar fell further this month, posting its biggest quarterly drop in nearly seven years… The dollar is clearly bearish and it’s headed lower in the months ahead.

How can we be so sure?  Well, as you know, markets are always about probabilities. Nothing is set in stone and it’s, therefore, important to be flexible. But if we stand back and look at what’s happening, the big picture is telling us the tide has turned…

Here are a few of the reasons why…

SENTIMENT HAS SHIFTED

Mainly, sentiment has shifted and it’s driving the currency markets, away from the U.S. dollar and into other currencies. Investors are concerned about the U.S. and there’s been a loss of confidence. Investors are feeling somewhat uncertain, especially foreign investors, so they’ve been lightening up on their dollars.

The U.S. economy has pros and cons going for it. But in this uncertain climate, currency investors have generally ignored the good news and reacted to the bad news.

For example, higher U.S. interest rates would normally be good for the U.S. dollar. But since rates are rising into a lackluster economy, it makes investors nervous. Also, with interest rates now poised to rise in other countries, it’s reducing the edge the dollar previously had.

Plus, it didn’t help that the IMF downgraded their forecast for U.S. growth, stating Trump’s target of 3% growth will be difficult to reach for several reasons, like an aging population and so on.

Then there’s the trade deficit (see chart). It’s still huge and this too is putting downward pressure on the U.S. dollar.

It’s also no secret that Trump wants a weaker dollar because it will make U.S. exports more attractive and help boost the economy. So he’s now getting what he wanted…

DOLLAR: LOOK AT DOWNSIDE

Looking at the U.S. dollar index, you’ll see what we mean…

Note the dollar index has stayed below its 65-week moving average, signaling the major trend remains down.

And as we pointed out last month, the dollar index could  likely decline to about the 93 level. This is the next support near the 2015-16 lows.

Going a step further, if the dollar index breaks below 93, it could then continue down to 86.50. In other words, if the dollar index eventually drops below 86.50, it would be super bearish, signaling a big bear market is unfolding.

EURO: Best

The euro has benefitted the most. That’s mainly because the euro is the offset currency for the dollar. So when the dollar declines, the euro rises the most.

The euro is also being boosted by more positive sentiment and better economic signs. The euro has remained bullish by staying above its moving average at 1.0980.

If it now stays above 1.15, it could then continue up to near 1.30. If so, that would be about another 10% gain from its current level.

For more information about The Aden Foreacast, click here.

Special Bonus Edition

Aug 1, 2017

Dear Daily Pfennig Readers…

It’s our pleasure to be here, filling in for our dear friend Chuck Butler while he’s on vacation.

To introduce ourselves, we’re Mary Anne and Pamela Aden. We write The Aden Forecast letter, and we’ve been happily doing this for 36 years. We cover the major markets, and we’ll be posting some of our articles here.

We also publish Dow Theory Letters. It was founded by the late great Richard Russell and, along with a team of top notch writers, we’ve carried on with his work. Some of these articles will also be posted during Chuck’s R&R.

And finally, you’ll also be receiving articles from GoldChartsRUs, our weekly trading service. Here our top trader covers what to buy, what to avoid, what to do about it and much more.

We hope you enjoy our articles while Chuck’s away.

Chuck’s transition is complete and we’re proud to have him as part of our Aden Group.

Best regards and here’s to good markets,

Mary Anne & Pamela Aden

Today we’re posting an article from Dow Theory Letters.

RICHARD’S THOUGHTS ON DOW THEORY

Richard’s Comments

Since I call my site and reports Dow Theory letters, I want to spout a bit of Dow Theory now.

The power and usefulness of Dow Theory has been doubted and sneered at since the early 1900s, but the effectiveness of Dow Theory has been proven over and over again.

Over the years, I’ve examined and followed countless new, improved market techniques and theories, and I’ve yet to see one that outdoes the Dow Theory over any extended period of time.

In the end, what I trust most is the price action of the market.

For those who follow the Dow Theory, I want to delve into one critical thesis. When a primary bull signal is given under Dow Theory, it means that the great primary trend of the market has turned up.

The Dow Theory does not tell us how far up the market will go. It does not tell us how long the bull market will last. The Dow Theory does not tell us the path the market will take as the bull market develops. It simply tells us – The major trend is now up.

I guess I’ve written this a few hundred times, but I’m going to say it again. The primary trend always runs to conclusion. The primary trend can be temporarily manipulated, it can be held back, it can be talked back, but ultimately, as night follows day, the primary trend will fully express itself. It will express itself whether it takes a year, or five years, a decade or more.

Yesterday I read a piece by an analyst in which this analyst claimed that there is no such thing as a primary trend. I read the piece carefully, and my conclusion was that this analyst didn’t know what he was talking about.

Let’s take a bull primary trend. A bull primary trend is seen when an item spends an extended period of time rising. Of course, in the course of the rise there will be many secondary corrections, but each correction will be followed by new highs. All true primary trends end in exhaustion. A primary bull trend ends when the last of the participants have “had enough” and take their profits.

As a rule, bull primary movements end amid great excitement and intense speculation. This occurs as a greedy public rushes in to buy the market while at the same time the “smart money” moves out. This creates the state of exhaustion, since the buyers cannot absorb all the supply that is put up for sale. A bull primary trend ends when the best that can be seen ahead is fully discounted in the price structure.

I should add that during a primary bull market the bull will attempt to rise while taking the fewest number of people with him. He does this with the help of multiple downside corrections.

THE PTI: Bullish too

I developed my Primary Trend Index (PTI) in the late 1960’s and early ’70’s for the purpose of aiding me in identifying the major or primary trend of the market.

My PTI is an amalgam of eight critical averages and indicators. Each indicator is based on the ACTION of the stock market (as opposed to sentiment indicators, monetary issues, etc.).

Thus, the PTI provides a special and unique technical picture which has been of great value to me and my subscribers over the years.

During a strong bull movement the PTI will tend to push up day after day and week after week. Let me put it more simply. When the PTI is rising on a major trendline basis, the inference is that the market forces are bullishly advancing in harmony.

For more information about Dow Theory Letters, click here.

Special Bonus Edition

July 31, 2017

Dear Daily Pfennig Readers…

It’s our pleasure to be here, filling in for our dear friend Chuck Butler while he’s on vacation.

To introduce ourselves, we’re Mary Anne and Pamela Aden. We write The Aden Forecast letter, and we’ve been happily doing this for 36 years. We cover the major markets, and we’ll be posting some of our articles here.

We also publish Dow Theory Letters. It was founded by the late great Richard Russell and, along with a team of top notch writers, we’ve carried on with his work. Some of these articles will also be posted during Chuck’s R&R.

And finally, you’ll also be receiving articles from GoldChartsRUs, our weekly trading service. Here our top trader covers what to buy, what to avoid, what to do about it and much more.

We hope you enjoy our articles while Chuck’s away.

Chuck’s transition is complete and we’re proud to have him as part of our Aden Group.

Best regards and here’s to good markets,

Mary Anne & Pamela Aden

Today we’re posting an article from The Aden Forecast.

A 1990s REPEAT?

The stock market keeps on rolling. Once again, it’s been hitting new record highs, in the U.S. and in many other countries. And despite these impressive rises, stocks are still set to rise further.

We know this may seem unrealistic, but that’s what our indicators are telling us. In other words, even though stocks are overvalued, they could keep going up and become even more overvalued.

In fact, we’re beginning to feel this bull market in stocks could end up being a late 1990s repeat…

This is illustrated on the chart, which is one of our favorites… It compares this bull

market (in red) to the big bull markets in 1974-1987 and in 1987-2000. Note that in those two previous cases, the stock market literally soared.

This time around, the bull market rise looks tame in comparison… and that’s saying a lot…

The bottom line is, despite the rise the market’s already had since 2009, if it continues to follow in the footsteps of these two previous bulls, then stocks could keep rising for a few

more years, reaching levels that’re much higher than most people are expecting.

In other words, more investors will start jumping in, not wanting to miss the boat. And this frenzy could end up being similar to the frenzies we saw during the dot.com bubble in the late 1990s.

You may remember, at that time stocks simply soared, reaching valuation levels that were totally unprecedented.

In true bull market fashion, the stock market was in a feeding frenzy for several years in the second half of the 1990s. Everyone was buying stocks like mad and that’s all anyone talked about. This is typical when bull markets reach maturity.

Currently, however, this hasn’t happened yet. Yes, stocks are hitting record highs but there’s no frenzy in sight.

This will probably come later.

A GLOBAL BULL MARKET

In the meantime, the world stock markets are mostly all rising and that’s another huge plus, see chart. We’ve often noted this is a global bull market but it’s a super impressive one.

Out of the 30 biggest stock markets, for example, 26 posted gains in the first half of this year. Plus, it was the best first half performance since the 2008 financial crisis. Also, half of those 30 markets are near record highs.

This is powerful, further fueling the bullish outlook. That’s even more so because all types of markets are rising… that is, markets in developed countries, emerging markets and frontier markets; these are countries that are moving up the ladder but aren’t yet emerging. So it’s all good.

For now, we continue to recommend riding this bull for as long as it lasts. Keep the stocks you have and if we see a downward correction in the weeks ahead, we’ll probably buy more stocks in some of the stronger sectors.

For more information about The Aden Forecast, click here.

Special Bonus Edition

July 28, 2017

Dear Daily Pfennig Readers…

It’s our pleasure to be here, filling in for our dear friend Chuck Butler while he’s on vacation.

To introduce ourselves, we’re Mary Anne and Pamela Aden. We write The Aden Forecast letter, and we’ve been happily doing this for 36 years. We cover the major markets, and we’ll be posting some of our articles here.

We also publish Dow Theory Letters. It was founded by the late great Richard Russell and, along with a team of top notch writers, we’ve carried on with his work. Some of these articles will also be posted during Chuck’s R&R.

And finally, you’ll also be receiving articles from GoldChartsRUs, our weekly trading service. Here our top trader covers what to buy, what to avoid, what to do about it and much more.

We hope you enjoy our articles while Chuck’s away.

Chuck’s transition is complete and we’re proud to have him as part of our Aden Group.

Best regards and here’s to good markets,

Mary Anne & Pamela Aden

Today we’re posting an article from Dow Theory Letters.

RICHARD’S THOUGHTS ON TAKING ACTION

Richard’s Comments

In all my years of studying people and how they function, I believe one of the least understood areas is that of thinking vs. action.

Sigmund Freud knew a great deal about this area, and he proved it when he wrote, “Thinking is rehearsing.”

In therapy, as investing, people do a lot of thinking. A man goes to a psychoanalyst three times a week for five years. In those five years he talks and talks and dreams about his problems. At the end of the five years he may be surprised to note that not much has changed.

Why has so little changed? Simple, thinking doesn’t change anything (with the possible exception of the way you think). No, change is brought about not by thinking (rehearsing) but by ACTION.

For instance, I thought about quitting smoking for 18 years. I thought about my being hooked, I thought about how bad it was for me, I thought about getting lung cancer, I thought about burning holes in my shirts. It was unbelievably depressing.

Finally I stopped rehearsing. I threw away my last pack of cigarettes, and I have never had a cigarette in my mouth since. My smoking dependency ceased when I stopped thinking and rehearsing, and when I finally took action.

Let me put it another way. NOTHING CHANGES BY ITSELF; you change your life by acting. But why are people so resistant to acting rather than thinking about acting?

The reason is that the status quo feels SAFE, while acting feels DANGEROUS. Nine out of ten people opt for the status quo in their lives.

People in the slums are afraid to leave the slums, people who are workaholics are afraid to relax, people who over-eat are afraid to diet. A neurotic will give up anything as long as he can hang on to the one thing he treasures most — his neurosis!

But the fact is that the status quo is usually a bore and is often unsafe. Think about it: the classic bore is usually the person who is totally comfortable where he is, and he will not even relate to anything different.

All right, what has all this got to do with investing and the market? The answer is, everything.  How many times have you wished that instead of thinking about buying stock X (or selling it), you had actually acted, bought it or sold it? How many times have you cursed yourself because you saw some opportunity but instead of acting, you gave yourself ten reasons why it was better to sit tight and watch?

Successful people ALL have one thing in common–they are willing to act. Failures all have one thing in common, they think instead of acting.

So if you’ve learned anything from this section, you can start by thinking about it. But if you are to actually benefit from this section, you’ll have to comprehend the vast difference between thinking and rehearsing — and ACTING.

Now, on another subject, here are Richard Russell’s Comments on the News

Maybe it’s mean to say this, but I think it’s rather pathetic the way investment advisors, newspaper reporters, TV commentators and the so-called Wall Street gurus all try to explain away the day to day moves in the market.

Good or bad business news is announced and the market rises, stalls or sells off.

In fact, a common complaint is that “good news is bad news.” Strangely, nobody seems to grasp the concept that stocks do not sell on yesterday’s or today’s news — they sell on expectations for the future.

Based on Dow Theory, Wall Street is in a bull market, so the market’s expectations for the future are positive.

Actually, the current business news is mixed, with some areas doing well while other areas are not. This is characteristic of an economy that is tired.

Going back over past years it is instructive to note just how the market and the economy related, once the major stock averages had topped out. Here’s the record:

  •  The S&P topped in December ’72 and the economy turned down 11 months later.
  •  The S&P topped in November ’76 and the economy turned down 13 months later.
  •  The S&P topped in November ’80 and the economy turned down nine months later.
  •  The S&P topped in August ’87 and the economy turned down 17 months later.
  •  The S&P topped in April 2000 and the economy turned down at about the same time.
  •  The latest peak was in July ’07 and the economy turned down two months later.

The Exchange may institute “circuit breakers,” the President may tell us that everything is hunky dory, the Fed may hold back on raising interest rates, unemployment figures may drop to record lows — but the market couldn’t care less.

The market is looking ahead — six months out and beyond. And one way or another, the market is going to fully express itself, sooner or later.

For more information about Dow Theory Letters, click here.

Special Bonus Edition

July 27, 2017

Dear Daily Pfennig Readers…

It’s our pleasure to be here, filling in for our dear friend Chuck Butler while he’s on vacation.

To introduce ourselves, we’re Mary Anne and Pamela Aden. We write The Aden Forecast letter, and we’ve been happily doing this for 36 years. We cover the major markets, and we’ll be posting some of our articles here.

We also publish Dow Theory Letters. It was founded by the late great Richard Russell and, along with a team of top notch writers, we’ve carried on with his work. Some of these articles will also be posted during Chuck’s R&R.

And finally, you’ll also be receiving articles from GoldChartsRUs, our weekly trading service. Here our top trader covers what to buy, what to avoid, what to do about it and much more.

We hope you enjoy our articles while Chuck’s away.

Chuck’s transition is complete and we’re proud to have him as part of our Aden Group.

Best regards and here’s to good markets,

Mary Anne & Pamela Aden

Today we’re posting from The Aden Forecast Weekly Update.

EXCITING MARKETS

Gold, silver and gold shares jumped up to a several week high today.  And gold has had its longest winning streak in two months.  It now looks like the six week decline we call ‘B’ is over (see chart).  This will be reinforced if the dollar remains weak and if they now stay above $1225 for gold, $16 for silver and 80 for the XAU gold share index.

Once the C rise heats up, it’ll be very telling about the overall strength of the market.  A very bullish C rise would be clearly underway once it surpasses last year’s peak near $1375.  This would be a milestone.

Silver’s flash sale was short lived.  Platinum is also bouncing up from a key support level, and it’s adding to the stable of firmness.

The commodities are looking better.  Copper and crude are on the rise, and they have room to rise further. Keep your positions, and buy if you want to add to your positions.

The falling U.S. dollar index has helped  boost commodities. And with sluggish long interest rates while Yellen suggests that rates could stay unchanged this year, it all helped to put pressure on the dollar. The dollar index is at an 11 month low while the currencies soar.

The euro, Swiss franc, Australian and Canadian dollars have all surged this week.  And today’s surprise move was due to ECB president Draghi who pledged to continue the ECB’s asset-purchasing plan through December or beyond.  So the euro jumped to a two year high (see chart).  Keep your positions.

Nasdaq and the S&P500 shot-up,  reaching another record high, along with some of the other indexes earlier this week (see chart).  The stock market remains strong and robust, and earnings season is looking positive.

The S&P500 is very bullish by staying above 2410 and the global stock markets are strong and bullish too. Our recommended stocks are doing well. Keep your positions.

T-Bills  (90-day) rose clearly above 1% this week for the first time in years, while long-term yields are sluggish. But increasingly,  long-term interest rates will likely soon be following short-term rates up. That is, bond prices are headed lower and it’s best to avoid bonds and stay on the sidelines.

For more information about The Aden Forecast, click here.

Special Bonus Edition

July 26, 2017

Dear Daily Pfennig Readers…

It’s our pleasure to be here, filling in for our dear friend Chuck Butler while he’s on vacation.

To introduce ourselves, we’re Mary Anne and Pamela Aden. We write The Aden Forecast letter, and we’ve been happily doing this for 36 years. We cover the major markets, and we’ll be posting some of our articles here.

We also publish Dow Theory Letters. It was founded by the late great Richard Russell and, along with a team of top notch writers, we’ve carried on with his work. Some of these articles will also be posted during Chuck’s R&R.

And finally, you’ll also be receiving articles from GoldChartsRUs, our weekly trading service. Here our top trader covers what to buy, what to avoid, what to do about it and much more.

We hope you enjoy our articles while Chuck’s away.

Chuck’s transition is complete and we’re proud to have him as part of our Aden Group.

Best regards and here’s to good markets,

Mary Anne & Pamela Aden

INTERESTING MARKETS

Today we’re posting an article from GoldChartsRUs.

Gold, silver and gold shares jumped up to a two week high while crude hit a 6 week high. The ongoing U.S. dollar dive has finally given them a boost.  And it now looks like the dreary days of June are behind us.

Our Chart of the Week shows this clearly.  Note how the dollar index and the gold price normally move in opposite directions. But there are times when one leads the other or they even move together for awhile, but they always eventually go back to their normal state that is to move in opposite directions.

Most interesting is their relationship this year.  Note how gold resisted twice near the $1300 area (see green asterisks) while the dollar continued its tumble.  Gold fell back in June in a decline we call ‘B’.

Gold has now regained its posture, bouncing up from its July 7 low, and it happened during the last fall in the dollar. It now looks like gold weakness is over, or just about over.  It’s time to keep an eye on $1300.

The only time it surpassed $1300 for a while was during the Brexit jump to last year’s August highs. You could say, if it wasn’t for this jump, gold would’ve probably resisted near this level.

The dollar indeed bottomed before Brexit and it too jumped up when the British Pound collapsed.

This means once gold breaks clearly above $1300 it’ll be breaking out of the stalemate situation this year.  It’ll become a ‘C’ rise in the bull market, and it would be very bullish above last August’s high.

In other words, it’s time for gold to ‘catch up’ to the weakness in the dollar.

Gold shares just don’t want to fall further. It’s also very interesting to note that this turn of events is coinciding with a four-year head and shoulders bottom in the HUI Gold Bugs index.

As you can see this bottom has been evolving since 2013 and it’s still forming.  And based on this technical pattern, if the index eventually breaks above the neckline (NL), the bottom will be complete and confirmed and gold shares could soar.  So this is something we’re watching.

The stock market rise just doesn’t quit.

The markets seem oblivious to politics.  From Donald Trump Jr.’s emails to Russian involvement in the U.S to an ever growing subprime auto loan problem, the markets don’t care.  Perhaps it’s the calm before the storm considering a number of hot spots around the globe.

Short-term interest rates have been on the climb while long rates are sluggish.  Yet Janet Yellen says the Fed may not have to raise rates more.  This gave gold and the stock market a boost upward while keeping pressure on the dollar.

The question here is, can the Fed’s Yellen and central bank policy markers really drain trillions of dollars in liquidity without harming the economy?  We’ll see.

For more information about GoldChartsRUs, click here.

) The Daily Pfennig is no longer published by EverBank and it is now published by Aden Research Group.  Please review Aden Research Group’s privacy policy and subscription terms carefully to be sure you agree with them – a link to those documents is [https://adenforecast.com/terms-and-coditions-of-service/ If you do not accept these terms, including our privacy policy, or if you wish to discontinue your subscription to the Daily Pfennig, please click chuck.butler@dailypfennig.com to opt out for future mailings of the Daily Pfennig from us.”

Special Bonus Edition

July 25, 2017

Dear Daily Pfennig Readers…

It’s our pleasure to be here, filling in for our dear friend Chuck Butler while he’s on vacation.

To introduce ourselves, we’re Mary Anne and Pamela Aden. We write The Aden Forecast letter, and we’ve been happily doing this for 36 years. We cover the major markets, and we’ll be posting some of our articles here.

We also publish Dow Theory Letters. It was founded by the late great Richard Russell and, along with a team of top notch writers, we’ve carried on with his work. Some of these articles will also be posted during Chuck’s R&R.

And finally, you’ll also be receiving articles from GoldChartsRUs, our weekly trading service. Here our top trader covers what to buy, what to avoid, what to do about it and much more.

We hope you enjoy our articles while Chuck’s away.

Chuck’s transition is complete and we’re proud to have him as part of our Aden Group.

Best regards and here’s to good markets,

Mary Anne & Pamela Aden

Today we’re posting an article from Dow Theory Letters.

RICHARD’S THOUGHTS ON WINNERS

Richard’s CommentsNothing created by the mind of man has ever equaled the stock market in terms of its sheer ability to frustrate people. Why is this? The answer is that the stock market frustrates because millions of traders and investors across the face of the US and the world are all trying to take money out of the market.

Now when millions of people are trying to take money out of the NYSE or NASDAQ, you know right off the bat that it can’t be done. A majority of people are not fated to make money doing anything, much less beat the stock market. “It’s not fair” you complain, “why can’t all those nice, well-meaning people make money with their trading and investing?”

There’s one simple fact that makes this difficult. And that fact is that throughout history, going back to the days of primitive barter, there have always been a small number of financial winners and there has always been a mighty army of financial losers.

So when we state that the stock market is “frustrating,” we must qualify the statement by asking, “frustrating to whom?” And the answer again is that the stock market is frustrating to the great majority of participant-losers, but highly rewarding to a small minority of informed, hard-working, intelligent winners.

Next question: What do you have to do to be one of the minority of investment winners? Answer: You have to work and work hard. It’s an ironic fact that people are willing to work hard and put in long hours in their own businesses or on their jobs — but then they think that they can turn around and make easy money in the stock market or in the bond market, or even in the commodity markets.

Beating the markets is the hardest endeavor in the world, and these supreme optimists believe that with a modicum of knowledge, little study, and a large portion of luck they can make money “playing the market.” It doesn’t work that way, never has and never will.

Here’s an interesting illustration of what I’m talking about. The great, historic Dow Theory writing was done by Charles H. Dow, William P. Hamilton, Robert Rhea and E. George Schaefer. How many analysts, how many professionals, have read the works of these four men?

How many pros have ever studied Dow’s Theory, which, by the way, is the basis of all technical market studies? Frankly, I think I could count on the fingers of both hands the analysts I know who have read and are familiar with the works of these men.

As far as my own personal efforts, writing about the stock market or even investing in the stock market without studying the works of these pioneers would be impossible. I learned to think in terms of bull and bear markets from Dow’s writings. I learned the history of

the stock market from Hamilton’s works. I learned how to read the Averages from Robert Rhea. I learned the real meaning of the primary trend from George Schaefer.

I added studies of my own to what I learned from the great analysts of the past, and out of all this I developed a stock market strategy and philosophy that seems to work. At least it seems to work for me and the majority of my subscribers.

I try to give investors an approach to the market that I believe will help them rather than just tell them “what to do.” To me, a typical list of stocks “that should double in the next six months” is useless. First of all, it’s a touting approach to the market which I don’t like, and secondly the odds are that few if any of the stocks on the list are actually going to live up to their billing.

Actually, my view is that 90% of my subscribers don’t have the time or the inclination to be as obsessed with the market (as I am), and therefore they are paying me to do some of the work for them. They are also paying me to present history, to present my ideas, to present my investment philosophy, and to provide my views of the market.

That’s legitimate, but I’ll let you in on a secret — I never want to be known as an expert or a guru. As far as I’m concerned, there are very few experts on Wall Street and market gurus (if indeed there have ever been any) are as rare as Australia’s DoDo birds.

“All right,” I’m asked, “then Russell, what the devil do you call yourself?” My answer is that I call myself “a market student,” but an avid one. That title is good enough for me. And it is the way I view myself.

Why am I writing all this? I guess I’m writing it out of frustration. Every day I read dissertations and tomes on why the market is doing this or that. And I say to myself, “How can this yo-yo get away with writing such nonsense? How can he mislead people so badly? How can I get over to subscribers the real picture, as I see it — the real picture minus the bunk, the wishes, the uninformed theories, even the misconceptions about Dow’s Theory?”

Then a little voice inside me says, “Calm down, Richard. You wouldn’t have a business if everybody did the work, if all the analysts were brilliant and honest.”

So I guess I will calm down and just do my own work and let it go at that. I love Wall Street although the truth is that I’ve never spent so much as a single work-day on the Street. But then, I’ve never been a chef, but I know a good meal when I’m presented with it.

For more information about Dow Theory Letters, click here.

Special Bonus Edition

Dear Daily Pfennig Readers…

It’s our pleasure to be here, filling in for our dear friend Chuck Butler while he’s on vacation.

To introduce ourselves, we’re Mary Anne and Pamela Aden. We write The Aden Forecast letter, and we’ve been happily doing this for 36 years. We cover the major markets, and we’ll be posting some of our articles here.

We also publish Dow Theory Letters. It was founded by the late great Richard Russell and, along with a team of top notch writers, we’ve carried on with his work. Some of these articles will also be posted during Chuck’s R&R.

And finally, you’ll also be receiving articles from GoldChartsRUs, our weekly trading service. Here our top trader covers what to buy, what to avoid, what to do about it and much more.

We hope you enjoy our articles while Chuck’s away.

Chuck’s transition is complete and we’re proud to have him as part of our Aden Group.

Best regards and here’s to good markets,
Mary Anne & Pamela Aden

QUESTIONS ANSWERED

We’re starting off with some of the most asked questions from our subscribers…

Q: Could the Russian investigation and Trump’s political concerns affect the markets?

A: So far, they haven’t. The stock market has basically ignored what’s happening in Washington and it’s still focusing on other things, like good earnings, the economy and so on.

But a couple of months ago, we got a taste of how this could indeed affect the market. The stock market fell sharply in its worst one day drop in months. The growing concerns in Washington were the main reason why and this is something we’ll definitely want to keep an eye on.

We’ll see… but if so, it’s important to remember that Watergate coincided with a big bear market in stocks in 1974 and a recession. That doesn’t mean this has to fall out the same way but, again, it does warrant caution.

Q: When you refer to a “normal downward correction,” what do you mean? The technical definition of a correction is after a market declines 10% from its high. Less than 10% is an adjustment.

A: These definitions are just something someone made up one day, and in the past decade or so many traders have taken these rules as gospel…

Another one is the definition for a bear market, which is a decline of 20% or more.

This doesn’t really mean anything. A bear market, for instance, could be a decline of 10%, 20%, 50% or more.  There are other indicators and tools to use that’ll determine if a market is bearish or not, and not just a 20% decline.

The same is true of downward corrections…they might decline 4%, 8%, 15%… It just depends on if it’s a steep correction or a moderate one. Here too, other indicators will assist in identifying when a correction is over.

Our indicators, for example, are designed to aid in identifying major and intermediate trends, and major changes.

But the numbers should not be ignored. Since so many traders follow this rule, you have to keep this in mind because it will affect sentiment.

Overall, however, all factors need to be taken together in an effort to reach an educated conclusion… at least that’s what we strive to do.

Q: When the VIX is high, the adage is to buy. When the VIX is low, it’s time to go. Does that still apply?

A: Like most stock market rules, this one is not ironclad…

As you know, the VIX index is the fear index. And the general rule is this… when investors are scared and fear is high, it usually coincides with a stock market bottom and you’d want to buy.

On the other hand, when fear is low, it usually means stocks have been doing well and the market’s near a top, so you’d want to sell.

This is not a timing tool and the rule doesn’t always work. This year, for instance, the VIX has generally been low this year, meaning investors have not been fearful, yet stocks have surged upward. So this rule, like many others, can go off the bandwagon for a while.

Q: Many experts are warning of a steep crash. Are you concerned?

A: We’re always concerned when we hear these forecasts. But we also know that many of these experts have been saying the same thing for decades. Yes, 2008 was scary but a total collapse just hasn’t happened.

We know that debt, derivatives, delinquencies, credit growth and several other factors are at worrisome levels, and some are in worst shape that in 2008. Like the subprime problem then, any of these factors could evolve into a wild card, triggering a crisis.

At this point, there’s no way of knowing when this might happen or how deep it could be, but here too we’ll be staying cautious and on the alert.

Q: What was the date of gold’s last C rise top?

A: The last C rise in gold started at the bear market low in December, 2015, and the top was reached in August, 2016. During that rise, gold gained about 30%. It was also the rise that turned gold’s bear market into a bull market.

This year gold has moved up too in a smaller rise we call “A.” But with the U.S. dollar now on the decline, it’s likely going to keep upward pressure on gold and it’s set to head higher.

Most interesting, even though the stock market has been getting all the publicity, most people don’t realize the gains in gold have actually been about the same this year. In fact, over the past 20 years gold has outperformed both stocks and bonds.

Q: Do you think there should be caution about stocks given the historical pattern in 1929? At that time, the Dow Industrials rose for 8 years, then corrected for 3 years.

This time, the Dow has been rising for 8 years. If we’re to see a similar pattern to 1929, then stocks could correct until 2020, which correlates to your time frame for a high in gold.

A: Well, anything is possible. We all know that. But looking at the price action, there is currently no sign of a stock market top, at least not yet.

On the contrary…  stocks remain strong and bullish, and they’re poised to rise further.
One important reason why is because interest rates remain near historical lows, and the stock market loves low interest rates.

The real estate market has been thriving too in this low interest rate environment. Real estate prices recently hit new highs and they’ll likely continue to do well as long as interest rates stay near these low levels.

So all things considered, this alone could make today’s situation different than what played out in the 1920s. But again, it’s best to keep on open mind.

For more information about The Aden Forecast, click here.

A Marriage Made In Heaven…

Chuck Butler’s: A Pfennig For Your Thoughts 

July 21, 2017  

* Draghi throws euro traders a bone!

* RBSA cuts rates… 

* Tons of paper trades keep Gold in check

 

Good day… And a Happy Friday to one and all!  Boy did yesterday’s infusion whack me out yesterday, as I came home, ate a delicious, Carl’s Deli sandwich, and went to bed, and slept most the day. I’ve still got that “foggy feeling” this morning, so I won’t attempt to make this a marathon news letter today. I know, you’re thinking, “Whew!” That’s OK, I’ll be gone for the next two weeks, you’ll be missing me soon enough! HA!  Don Henley greets me this morning with his song: The Last Worthless Evening…  

Well, let’s get right to this today… The dollar ends the week looking at a Dollar Index number that it hasn’t seen since 2015…  And the main driver of the index’s downward move is the rise of the euro…  And if you haven’t figured it out by now, even though I’ve said it over and over again, that this dance is gonna be a drag, no, wait! I’ve said over and over again that the sentiment toward the euro has switched to loving the single unit and not the dollar… 

Well, we’re going to the chapel and we’re, going to get married, going to the chapel and we’re, going to get married. Gee I really love  you and we’re going to get married, going to the chapel of love… That’s what euro traders and the euro were singing together yesterday, as the euro’s relative, Mario Draghi, gave the traders the wink and nod, and all was right again, after the euro traders had displayed a bout of cold feet at the altar the previous day… I told you that the traders would be back, and come back they did, with flowers, candy, and heartfelt sweet nothings for the euro’s ear… It’s now a match made in heaven…

Ahhh, I love it when a plan comes together, and it was little old me that played match-maker for these two 6 months ago, when I said the strong dollar trend appeared to be ending, and the sentiment / love would switch from the dollar to the euro… Back then the euro was trading with a 1.09 handle… So, let’s see, even if you waited a bit and didn’t buy your euros until they reached 1.10, you would still be looking at a 6-cent gain! Now, that may not sound like a lot to you, but when you invest larger sums of money, which you tend to do with currencies,, that’s a 5.4% return… I’m just saying… I wrote about it here… I wrote about it in the Old Review & Focus,… I wrote about it in the Dow Theory Letters… and if I was a Beatle, I would sing it from a rooftop! If I were a hammer, I’d hammer in the morning, I’d hammer in the evening, all over this land, and I would hammer home that the strong dollar trend has ended, it’s time to back up the truck, and get a load of euros, and whatever flavor of currency you prefer, and throw some Gold & Silver on top so they don’t blow away while you drive off into the sunset, with a smile as wide as a country mile!

OK, slow down here Chuck, you move too fast, you’ve got to make the morning last! Why don’t you tell them what Draghi said yesterday that stirred the euro to a 1-cent gain on the day? OK, I guess I can do that… Well, as you know, being the astute reader that you are, because I told you so… The markets were looking for the ECB and Mario Draghi to throw them a bone about when the uber-accommodating monetary policy might begin to be dismantled.. And Draghi delivered the goods, telling the markets that Q/E (Quantitative Easing) talks to tighten would begin in September. What’s that fizzling sound in the background? Oh, it’s all the euro holders grabbing for the Plop, Plop, fizz, fizz, oh what a relief it is, Alka Seltzer… Hey there was no reason to get your stomach all tied in knots over this, if he didn’t say it this time, it would be the next meeting, or the meeting after that… 

And how can I be so sure that THIS TIME is not a false dawn with regards to the end of the Strong dollar trend? Well, I’ve told you before about the data prints in the U.S. whether they be good or bad, the dollar ends up getting sold anyway… And then yesterday, yes, Mario Draghi did throw the markets a bone that they were looking for, but he then went on and sounded pretty dovish to me, but the euro traders didn’t care, they got what they came for, and let the dovish comments slide…  That’s a classic illustration of a currency that’s in a strong trend…  And the dollar’s reaction to economic data is a classis illustration of a currency that’s in a weak trend… 

And here’s something else that’s really a side session, but plays back into the dollar/ euro trading… The Reserve Bank of South Africa (RBSA) surprised the markets and the economists that made a call on rates, with a rate cut. Their first rate cut in 5 years… The rand fell as a knee jerk reaction to the surprise rate cut of the internal rate from 7% to 6.75%, but then rallied back by the end of the day, and has continued to rally in the overnight markets… 

So, is the RBSA on a rate cutting spree? I doubt it seriously, folks… The cut rates with inflation at the top of their range, and I think this is a one and done for the RBSA, which means if the rate cut didn’t slow down the real, which has been one of the better performing emerging currencies this year, this time, then the rand should be set for a nice run…  Now, I’ve always said that I wouldn’t touch rand “with your 10-foot pole”, except in a bundle that would help protect the investor from the wild swings of the rand… That’s why at the “old place” I created what I called the Commodity Currency CD, that included: A$, kiwi, rand and loonies… 

Back then, the Brazilian real, and the Russian ruble weren’t available, but are now…  And look what currencies are setting the pace that aren’t the euro, or a part of the Dollar Index… The A$, kiwi, and rand, the loonie is a part of the Dollar Index, but its weighting is low, so let’s say it’s not! I read an article a couple of days ago, about how this has been a disaster of a year for commodities… And I thought, hmmm… Is that right?  It’s not been a great year, or a good year, but a disastrous year? Hmmm…

So, here we are in the middle of summer, the middle of July, and we’re watching the dollar’s strong trend come to an end… These trends don’t end with a loud bang, instead they fade off into the sunset. That’s why it’s difficult to pinpoint exactly when a trend ended or began… The thing that really concerns me about this new weak dollar trend, is that it begins at a time when debt levels are soaring, and going higher every day…  Knowing that, my mind begins to race around and think about all the bad things that can happen when debt levels cause a financial system to collapse… 

But then I just say, “Chuck that can’t happen”, and then go check my statement for my Gold & Silver holdings, just in case…  And of course I know “it could happen” but don’t you tell yourself little lies to make you feel better? Well, that’s what that is… 

Speaking of Gold, it was a wild day at the COMEX yesterday, with 216,000 contracts traded, which the “boys in the band” needed to put a governor on Gold, as the Dollar Index began sliding, and Gold looked poised to rise by a good amount, but was held to a $3 gain to close the day at $1,244.00…  But “something” happened in the overnight markets and Gold has popped higher to $1,253.80 as I write. 

I sure hope that what I wrote about earlier this week, is going to come true… I’m talking about the quote I printed by Avery Goodman, who said that he witnessed lots of closing of short paper Gold Trades that were long dated… His thinking was that the short paper traders were pulling out… Well, the “boys in the band” may have put their instruments down, but they haven’t left the building, because they were in with a bang yesterday keeping Gold in line… 

Well, I’m just about out of things to talk about this morning, but did want to mention the large move in the New Zealand dollar / kiwi yesterday and overnight, and if you took a peek at the currency roundup, that’s right, that’s kiwi trading with a 74-cent handle this morning! Remember when I kept telling you that the time to buy kiwi was when it was 72-cents, and that it was flying under the radar?  Well, fly under the radar no more! But, if this goes the way I think it will, it’s still not too late… 

There is no trace of a data print today in the U.S. Data Cupboard, and yesterday’s lot of data prints was a virtual “who cares?”…  But I can tell you that the Philly Index, which is a check on the pulse of the manufacturing for the Philadelphia region, fell from 27.6 in May to 19.5 in June… Quite a drop, but in the whole scheme of things, really not that important…  

And this is another classic illustration of a currency in a weak trend is when there is no data to print, and it should be able to garner a buy or two, but can’t seem to find a buyer anywhere. Sign, sign, everywhere a sign Blockin’ out the scenery, breakin’ my mind…  The signs of the end of the strong dollar trend are everywhere folks… And just because I’m the only one out there that’s saying it doesn’t make it wrong!

To recap… Mario Draghi, while sounding dovish, did throw the euro traders a bone yesterday, telling them when the talks will begin on tightening QE (Sept)… And the euro rallied more than 1-cent on the day! Chuck sings an oldie and talks about how the euro traders and the euro got married yesterday, after the traders had displayed a case of cold feet the day before. Kiwi also had a great day and night, and Gold was able to gain $3, but has popped higher in the overnight trading. 

For What It’s Worth…  I found this on the Bloomberg this morning, and it talks about something that I began talking about in 2003… Underfunded Pensions here in the U.S. Well, this problem has gone from a minor problem to a major problem that the markets can’t ignore any longer. You can read it here: https://www.bloomberg.com/view/articles/2017-03-24/pension-crisis-too-big-for-markets-to-ignore 

Or, here’s your snippet: Well, I don’t have a snippet for you today, because, well… I think it best for you to read the article…  But in reality my cut-n-paste feature won’t work this morning… So there you go!

Chuck again… Could this be the snowflake that causes an avalanche here in the U.S.?  I would think so! As I said above, I began talking about Underfunded Pensions in 2003, so that’s 14 years of growing even more underfunded… That’s scary to me folks…  

Currencies today: 7/21/17… American Style: A$ .7926, kiwi .7442, C$ .7954, euro 1.1644, sterling 1.3013, Swiss $.9501, … European Style: rand 12.9579, krone 8.0335, SEK 8.2442, HUF 262.11, zloty 3.6329, koruna 22.3397, RUB 58.96, yen 111.55, sing 1.3635, HKD 7.8081, INR 64.26, China 6.7625, peso 17.48, BRL 3.1396, Dollar Index 94.13, Oil $47.10, Silver $16.37, Platinum $932.45, Palladium $852.78, and Gold… $1,253.80 

That’s it for today… Cards lose another game in the 9th inning yesterday, one step forward, two steps back for this team… UGH!  it’s a good thing I slept through the game…  Alex is staying with us for a couple of days while the A/C in his building gets fixed… It’s nice seeing him here… Well, this is it for two weeks for me… But… don’t dismay!  My good friends, and now bosses, Mary Anne and Pamela Aden are going to be sending you dear Pfennig readers a treat the next two weeks, as they go through some of their favorite letters, that still hold true today… So, look for that in your email box! I asked Mary Anne and Pam to do this, and promised them that you dear readers wouldn’t have a problem with it… Besides you get another viewpoint for 2 weeks… Pink Floyd takes us the finish line today with their song: Time…  Which is appropriate because it’s time for me to get off the bus this week, and send you on your way to a Fantastico Friday!  Be Good To Yourself my friends, and I’ll talk to you again in 2 weeks!  

Chuck