Something’s gotta give!

Silver’s nearly 30% drop last Friday was its largest drop in recorded history. What’s crazy is that it never gave a sell signal using most daily trend following methods. Why ?, because even this volatility was not high enough! We have got used to such large gains in precious metals that we don’t see in reality how great they were. A rule of thumb I learnt from the financial crash of 2008 was that miners can easily drop double in one day what the metal can. All it needs is a liquidity event and I think that one is coming.

A lot of market commentators said that it was the ‘Warsh Effect’. Kevin Warsh receiving the presidential nomination. Remember Warsh hit out at Bernanke’s dovishness at the Fed in reducing interest rates. But interestingly he has been more dovish recently. If he hadn’t, he would not have got the job. He has shown one thing consistently, when the Democrats were in power he favoured higher rates and when the Republicans were in power he favoured lower rates. He’s more political than anyone in this position that I can remember. At least that’s a good thing, an economist could never deal with Trump’s manouvering.

I do feel that there is something wrong going on under the cover though. I personally think that with Trump’s antics that other countries will decrease their purchase of US bonds. It’s their one very obvious weak spot. Can you expect Denmark to continue purchasing them? Most western governments purchase US 10 year bonds and longer US 20 year. The etf’s that most represent these purchases are reflected by IEF(7-10 year), TLH(10-20 year) and TLT(20 year+). At the moment TLH and TLT are sell’s and in the next few weeks the shorter term IEF should be a sell. It’s hard to get real transparency in the government Bond Market except for the yields. Anyway I think there is something happening that will seriously effect the US economy.

Also I noticed that the ‘Expanded Tech’ ETF called IGV has sold off three weeks ago. Its largest components are Microsoft(9.28%), Palantir(8.25%), Salesforce(7.60%), Oracle(7.53%), Intuit(5.14%). Every one of them is a sell.

The next logical failing point will be the MAG 7 list.

Now lets look at the ‘World Asset List’. The most worrying closures are with Expanded Tech Software(IGV) and Software & Services(XSW). Something going on here that could rot the barrel. Great to see that Uranium is now a buy again(U.UN:TSX) and even though the US dollar rallied this week it’s a new short. Yes it rallied last week but it’s still bearish weekly.

On the individual world share front the MSCI World Large Cap Stocks have again hit the ball out of the park. Note the close of Palantir(PLTR, +887%) for a staggering 887% profit along with Crowdstrike(CRWD, +19.82%) and Moderna(MRNA, +124%). Note the industry that these first two are in. Now you see my point. The lions are starting to get nervous. My trades for the last few weeks are below. All the best, regards, Pearse.

Note:The above trades do not take into consideration dividends on shares or coupons on bonds. This is important because if you short a stock or bond the dividend will be taken from you. Therefore the safest strategy is never to short any instrument only buy an upwardly trending security and simply close your position when this ends. These trades are my view on the market and not me advising you to take any of these positions.  Closed positions have losses and profits listed in percentages. Mainly as a record to myself so I keep honest in evaluating my strategy.
The list of stocks analysed are from the MSCI Large Cap list as of 01/01/2025.