Poor data, again, late in the week couldn't get the market to stumble very much. Some, yes, but in a big way, no. We saw the number from the Philadelphia Fed come in below the zero level again after going green the prior month. Minus five, and change, showing their economy is in recession for the very short-term at least. On top of that, we then saw a huge increase in the jobless claims number. Thirty thousand bump up and well above expectations. The type of one-two punch that should knock the market down, but once again it did not, while the majority scratch their heads wondering why we all know the reasons by now. There’s nowhere else to go. Interest rates are too low and the liquidity machine on every day all day long. A lethal one-two punch the bears are not able to overcome at this point in time.

The bears obviously feel the angst of trying to take the market lower when no matter what news comes out, things try higher over time. The lesson being never short a bull market with any force and never go long in a bear market with the same type of force. Just follow the trend and, for now, the bears are sitting back as they just can't make any head way. Today was a microcosm of what's been ailing the bears. They get a nice move lower late in the day yesterday only to see the bulls jump right back in the saddle today. A good day for those bulls today as the overall up trend is firmly in place.

The commodity world, the SPDR Gold Shares (GLD) and iShares Silver Trust (SLV) world in particular and why not, throe in coal, are just acting horribly. So why the drop in those stocks if we have inflation? Someone asked me that today. The feds flooding of dollars is for the banks. If the banks can't get that money out to the right places, it doesn't add demand for those commodities in our country or the world for that matter. It appears the world is still struggling along meaning demand just really isn't there. These stocks struggle while the market finds bids elsewhere in our low rate environment. Sure, health care rises. That's not coal. You get the point. The answer is really simple. Inflation exists in the wrong places because the world economies still aren't rocking along. When they do, coal and some of the other dead commodity stocks will finally get rocking along with the rest of the stock market.

When bull markets make important breakouts they will get overbought. In some cases very overbought. That's always a red flag, for sure, but there's always the possibility of chasing performance by those who have been bearish or out of the market and, thus, overbought can stay that way for a very prolonged period of time. A lot longer than anyone, including yours truly, would think possible, which is why you always have to have some exposure on the long side. It doesn't mean you have to be fully exposed, but you do want some exposure at times like these.

You have also been prepared for selling, and some that may be a bit more intense than you'd like but the market is on breakout and, thus, you have to recognize that we may stay quite overbought for some time to come. As long as we stay above 1597 on the S&P 500 longer-term then you have the bull market still alive and kicking. Adjust accordingly. When you study the charts this evening, they are quite self-explanatory. Take the time to look them over and understand what's taking place. You may not agree with it, or honestly understand it, but the lesson is to never fight what you see, even if you think it's inappropriate. I think it is but I never fight it.

Have a nice weekend.

Peace,

Jack

I try to keep a balanced portfolio, or at least one that isn't entirely concentrated in one sector.

I like a lot of international holdings, especially from East Asia (but not particularly China itself) and I try to have at least some representation even in sectors that bore me utterly, like consumer packaged goods - Procter & Gamble (NYSE: PG). I know you've increased your dividend every year since 1954, which is a magnificent achievement, but I STILL can't get excited about your business!

Some market sectors I have difficulty warming up to. Tech, for example, I find very difficult to analyze. If a company has the latest whizz-bang, I can't tell how the market will receive it. I can't tell how long market enthusiasm for it will last, and I can't tell how quickly competitors will produce something that's just a little bit better.

Even an Apple (Nasdaq: AAPL) that appears to have an invulnerable position can very easily be undone by margin erosion. Apple's margins are unsustainable in a competitive environment; it has a business in which Foxconn, the manufacturer, makes very little money while Apple, the retailer, makes heaps of it. For me, instead of trading at a premium to the market because of its growth, tech should trade at a discount to the market because of its risks.

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Make no mistake: The April sell-off in gold created some extensive "collateral damage" in the silver market.

The silver price dropped nearly 20% in just two days... and many Wall Street analysts were quick to downgrade their forecasts for the rest of 2013.

But we believe Wall Street analysts have grossly misinterpreted recent events.

And they have missed some extremely strong fundamentals regarding silver which makes the metal a fantastic investment today.

In fact, not only is this a good time to get your hands on silver... Recent events have made this possibly the greatest silver buying opportunity in history.

Let me explain...

When a particular side is taking control of the short-term, you want to see certain behavior take place to confirm the trend is what it appears to be. You want to see technical action occur that solidifies the action. The market had a huge gap down last week. It needed a follow through gap down this week and got it on Monday. That's not the follow through I'm talking about however. After yesterday's move back up on a gap, the bears needed another gap down with force today to remove that recovery, and that's exactly what took place. The futures were down as soon as the trading day ended yesterday, which can be an ominous sign for the next day. It didn't disappoint.

The futures drifted lower all night, and then accelerated its selling once the European futures hit the market place. Those futures were nasty, and thus, our selling kicked in as the night went along. We gapped down hard and then spent the rest of the day moving lower with lots of swings along the way. We closed off the lows, but the damage was done at the closing bell. Another gap unfilled. That's three for the bears and only one for the bulls. It's not good for the bulls short-term folks. The market never really tried to get back from the large losses. They were down triple digits all day, the market sending a message that it wants to rest. This doesn't mean a bear is here, but it does tell you to relax and wait for bottoming candles. Always wait for the right bottoming candle before trying to make some very short-term long plays. Cash is best for now.

Let's go back in history. There has never been a time when the daily and weekly index charts get extremely overbought at the same time and stay that way for very long. Recently we had the weekly charts join the monthly charts at overbought on all the key index charts, and thus, it was only a matter of time before the market had to start selling off. No choice really. Folks are trying to understand why the market is falling. Is it Europe? Is it the losses in SPDR Gold Shares (GLD) and iShares Silver Trust (SLV)? What is it? Keep it simple. It's overbought extremes taking the market lower in order to lower those oscillators to a place where there's at least the potential for further gains.

When the market does get this overbought, the correction to follow can be, but doesn't have to be, quite severe. It can also last for quite some time, which never feels good but this is how you also unwind extremes of sentiment. You get the masses thinking you can never go higher again, thus, the bulls become more bearish, which allows the ingredients to come together for further upside action. Wash, rinse and repeat throughout time. The game of emotion being the ruler of all things up and down in cycles. We have seen two pullbacks of nearly 400 points on the Nasdaq when we had these same overbought conditions on the weekly and monthly charts. That does NOT mean it will be that intense this time around, but it can happen. That's why we let the market tell us when the bottom is in, at least for the short-term, through bottoming candles. Just be very cautious for the near-term.

The selling was across the board today as the market seems to be selling any and every earnings report. The reason is simple. These stocks are full after a long run up. Not much they can say at this point to allow them to go much higher short-term, no matter what they say. There are really very few places to hide your dollars now as more and more stocks and sector charts are breaking below key support levels, such as their 20- or 50-day exponential moving averages. The moves down are on heavier volume in most cases with nothing more than back tests happening before falling once again.

With fewer and fewer stocks in good bullish patterns, it's now getting harder for the bulls to have any real gains with sustainability. The tide has shifted short-term, and that's really good news for the bulls bigger picture, even though it doesn't feel that way. The market needs some deeper selling to unwind things. Bulls don't want to hear it, but that's the truth. You can't stay overbought forever without paying the price at some point. With very few places to go, the bulls are backing off, making it easier for the bears to knock the market down. Please be patient while the process continues.

3200 is big support for the Nasdaq, which, of course, is the leader of the stock market. With Apple Inc. (AAPL) losing 418 today, meaning it's on a triple bottom breakdown, the Nasdaq  should continue to lag as it's very heavily weighted. When the Nasdaq is leading down things are not healthy. 3080 is great support, and a move there would be great for the market bigger picture.

We take this one day at a time as always but for now, CASH is a wonderful position.

Peace,

Jack

Yes, the selling was across the board today, but the most interesting part of today was watching the continued bursting of the commodity bubbles in gold and silver, along with other areas of the commodity worst. Gold and silver and other commodities have never been anything more than pure froth or a bubble, no different than the bubble that existed in 1998-1999 in the world of technology. What you learn through age is that ALL bubbles burst in time and never come back. The only sad part of bubbles that burst for good is the amount of people who sadly get sucked in at the top. They lose lots of money over the first few months, but are told to hang in there as it always comes back in time.

The problem here is they don't always come back. There is that one time when it says goodbye forever. So now folks are deeply under water. They don't know what to do and, ultimately, they'll get out. No one believed gold could fall over 100$ in a given day, let alone $200 over two days. What people don't grasp is once the bottom falls out, panic sets in. People run for the exits. Margin calls come in to play and, well, you know the rest of that very sad story. Big money buys it up early on, and then distributes it out over time. The big money knows foolish retail buyers will chase back up, thus, they can wait again to sell more or distribute out at the next test back up.

If you study the charts of iShares Silver Trust (SLV) and SPDR Gold Shares (GLD), you will see the high volume selling that has been taking place for a couple of years now off tops. Notice the lighter selling as retail bought it back up only to once again have the big money, or the smart money if you will, sell if off all over again. It's not a happy story nor will it ever be again. GLD, SLV, and the rest will enjoy wonderful oversold rallies over time, but it's best to avoid the bubble once it has gone to meet its maker. Make note of what has taken place and try to avoid the falling knife. Avoid that which should be avoided. Don't play the hero because you think enough is enough. Be smart and recognize what's taking place. GLD and SLV, along with other commodities are painting bad news for their bulls.

What's going on here? What is the message being told in the real world versus Disneyland? Is it the worst possible scenario over time? Is it stagflation? I don't know for sure, but it certainly could be. Let's discuss this. We have seen a very high number of weak reports come in with regards to our economy. Manufacturing ran in to the wall last month with a very rapid decline month over month that surely raises the red flag. We have seen a very poor Jobs Report that caught everyone, every economist, off guard. We are seeing jobless claims trend higher.

No one reading this message will deny that the cost of health care is rising. No one reading this message will spend one second telling me that the cost of food isn't rising very rapidly. No one reading this note will tell me that salaries are rising or that job security is there like they'd like it to be for the majority of people. We may be seeing a decline in wealth but a rise in cost. Not what we need but that may be what's developing here. Stagflation may in our futures. That doesn't mean the market is toast. Not by any means.

The market gapped down in part due to the selling in the commodity world. The market wasn't down very much early on but that selling accelerated as the day went along. It got very nasty after lunch time, but it was no picnic before that. When the day ended the losses were significant but most interesting was the triple digit losses in the Dow and Gold, which had never happened before in history. The Nasdaq, once again, led down by quite the margin. This is normal and typical when things correct. Froth gets smoked first. No exception here to be sure. Apple Inc. (AAPL), Priceline Inc. (PCLN), and a host of other froth stocks were absolutely smoked along with the transports and the commodity stocks. Just about everyone joined in. Even those untouchable biotechnology stocks took it on the chin and they never seem to go down, wildly overbought or not.

Today was a technically damaging day as the S&P 500 lost key support at the 1575 breakout. The market head fakes out through the top and trapped the aggressive bulls. That's why I have been saying to please play lightly. We were going to get hit at some point, thus, to have less exposure makes this far more tolerable. From here you take it easy. With strong technical damage in place it's going to be very hard for sustainable upside for quite some time. The trend is likely down short-term. We need deeper correcting, and I'm hoping we get it to set things up much better for the bulls, but again, time will need to be your friend. Entering aggressively too soon isn't advisable. Up days will take place, but the damage is going to need a decent amount of time. Patience!!!

Peace,

Jack

Gold (NYSE:GLD) is getting absolutely taken to the woodshed this morning, down more than 4% after breaking macro support. Silver (NYSE:SLV) is down even bigger, so far more than 5% lower. While the magnitude of today’s sell-off is taking some people by surprise, there were clues that GLD was weakening and levels to exit the [...]

View the full post at: Gold (GLD) Taking a Beating After Breaking Macro Support

With silver looking even more alluring than gold lately, it's smart to consider investing in silver miners - and a new ETF gives investors one more option.

The PureFunds ISE Junior Silver ETF (NYSE: SILJ), launched in November, differs from other silver mining ETFs in that it focuses only on junior silver miners.

The PureFunds Junior Silver ETF joins just two other silver mining ETFs, the Global X Silver Miners ETF (NYSE: SIL) and the iShares MSCI Global Silver Miners ETF (NYSE: SLVP).

While silver mining ETFs, like silver mining stocks and gold mining stocks, have not tracked the rise in price of the precious metals themselves - many are down anywhere from 10%-20% year to date - the tide is ready to turn.

Many signs point to increasing silver demand in the months ahead, and in recent weeks more money has started to shift out of gold and into silver. Investing in silver mining ETFs is one way to get out in front of this trend before the rest of the crowd.

"For 2013, I think silver, like gold, will set a new all-time nominal price record, likely reaching as high as $54 an ounce," Money Morning Global Resources Specialist Peter Krauth said in his 2013 silver price forecast.

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Until recently, an entire class of investors that control a huge pool of money - more than $27 trillion worldwide - have almost entirely ignored gold.

But lately, this group has begun to show more interest in the yellow metal, a trend that ultimately will exert massive upward pressure on gold prices.

We're talking about pension funds, which typically have had little interest in gold.

But with more traditional investments like bonds at historic lows, many pension funds aren't getting the returns they need to fund future obligations.

And with central banks debasing most major currencies and risking higher inflation, pension fund managers almost have no choice but to consider adding gold.

It's already started in Japan, which has about $3.4 trillion in pension funds - second only to the U.S., which has about $20 trillion.

In response to Prime Minister Shinzo Abe's pledge to spur inflation by printing more yen, Japanese hedge fund managers plan to double their gold holdings from about $500 million to $1.1 billion over the next two years, primarily by investing in gold exchange-traded funds (ETFs).

Itsuo Toshima, who represented the Tokyo office of World Gold Council for 23 years through 2011 and now advises Japanese pension fund managers, sees gold becoming a standard asset as inflation becomes more of a threat - with major consequences for gold prices.

"Pension money invested in bullion is "peanuts' at the moment," Toshima told Bloomberg News. "If 1% of their total assets shift to the metal, the gold market would explode."

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