Major Industry Sectors and the one Investment that Seems to be Getting a LOT of Attention

While broad market averages aren't looking good, many other related indicators such as the carry trade, aren't looking good, High Yield Credit, Corp. Credit (especially in light of BAC's disclosure last week that Corp. loan origination has fallen off at the fastest pace and at lows not seen since Lehman Brothers when the entire financial market froze up) aren't looking good, there are one or two sectors from what I see that money is PILING in to at an incredible pace, this is the same general sector that we have been watching as it bottoms and the same sector I have said numerous times in the past that I expect to see a long term primary bull trend in.

First lets just take a look at a number of sectors that I've been able to get very clean, clear and confirmed signals in so we can compare.

*With the Dow Industry groups, I used Multiple Timeframe Analysis of the prevailing trend and confirmed when possible via multiple asset confirmation. The charts I chose to represent each trend where the median of my analysis for each group (the chart that gives the best feel of all of the different charts looked at). In some cases there have been recent changes in Industry groups so there may be two charts, one showing the longer term trend and the second showing the more recent trend changes.

This is the DJ-US Telecom Index, this is a 2-part chart as the longer trend above shows weakness at the 2007 top and even more weakness at the current area, the next chart is also the same Index, but a closer view or more detailed view.

 DJ US Telecom Index, has shown some very recent weakness as the longer term trend has well defined weakness. I'm using the longer and shorter charts to show trends and probabilities the same way I'd use a 60 min chart for strategic probabilities and something like a 5 or 15 min chart for more tactical probabilities/timing. This chart looks to weaken more form here.

 I find this very interesting because I believe most of QE was a stealth bank bailout, these are US retail banks, what is interesting is the sharp deterioration from 2013-2014, the same time the F_E_D was making it VERY clear they were about to and then started to, back out of accommodative policy (QE-Taper). Before that had been made clear for those who were paying attention, this index was moving largely in line.

 This is another example of the above, The Dj US Financial Index, which saw distribution in 2007 , accumulation at the 2009 lows when it became apparent the F_E_D would expand their balance sheet in what I firmly believe was a stealth bank bailout as the public's reaction to the AIG (and other bailouts like GM) was very extreme and angry, how may average Americans do you think understand QE and the method by which money is transferred from the F_E_D to the banks at US taxpayers' cost?

Again, around the time it was clear the F_E_D was backing out of accommodative policy, a very strong chart turned very ugly.

 The DJ US Basic Materials Index, this chart is not surprising at all as QE had the consequence of driving up commodity prices (especially in QE1 and 2 as you can see on the chart in to the second red arrow) causing producer input prices to rise exponentially, while their output prices fell. This looks to be a very interesting area to do more digging around, essentially commodities, Steel, Aluminum, etc.

 DJ US Biotech Index which was seeing confirmation, then additional accumulation at the white trend line and a nearly parabolic run in to very recent, strong distribution, thus this is worth a closer look at more recent action.

 Daily chart of the US Biotech Index, late 2013-2014 hasn't been looking good and the failure to make a new high with the rest of the market in generally very high beta stocks is also weak-looking.

 This is the DJ Corporate Bond Index, Credit... Remember BAC's shocker last week that Corporate loan origination had fallen at the fastest pace since Lehaman in 2008, it's little wonder the chart and candlesticks look the way they do.

One of my questions is without QE, without US first time home buyers taking out loans, without corps. taking out loans, what happens to the traditional banking model which they haven't had to rely on since 2008 when QE is fully tapered out? and rates begin to rise?

I think this could be one of the most dangerous sectors in the economy (Financials).

 The DJ US Healthcare Index. This is another interesting one as Obama had certainly made Healthcare reform a staple of his run for presidency, thus the extreme accumulation around 2008-2009 makes sense,however, something was clearly lost in the execution of Obama_care and the 3C chart seems to be reflecting that sharply.

This is a closer Daily chart view of the US HealthCare Index.

 This is the DJ US Retail Index, if you understand what QE did to savers/consumers (they paid the heaviest toll), the Retail Index probably makes some sense as well, none of this is out of line with the broad market averages either.

 This is a close daily chart view of an apparent top in the Retail Index.

Here's where we see an enormous change in character, the DJ Precious Metals Index. 

 There was VERY clear distribution around the 2011 top, that's when we called a top in Gold and expected at least an Intermediate Down trend if not primary, we got a solid intermediate downtrend, but something has changed recently. Often interest in gold picks up on the EXPECTATION of inflation. 

Pay attention to where the chart goes strongly positive divergent, in to 2014. This area also looks like a bottom being carved out as I have said for some time and coincides with the exit of the F_E_D from highly accommodative policy. I wonder how well the F_E_D's inflation expectations are truly anchored? This could have a very interesting twist on the F_E_D's time-table for rate hikes, this is something I'll be listening to very carefully this Wednesday as I've already said I expect some kind of hawkish tone.

 DJ Gold Mining Index

Note the similarity between the DJ Gold Index above this chart and the AMEX Gold Mining Index, especially as it relates to 3C action around 2014.

Now note the similarity between the two above charts and this one of GDX, the Gold Miners ETF.

 And GLD, recall we called the 2011 top nearly on the nose, but look at action in to 2014.

Here are some individual gold mining companies, note the similarity in their charts as well...

 NEM

RBY

GFI

GG- these are large bases, some along the lines of the 1999-2000/2001 Home Builder accumulation that lead to gains of +2500% in some instances.

 ABX

I'm not quite as excited about Silver, but it is worth noting...

 SLV

And some individual mining companies with very similar trends to the gold miners...

 SLW

HL

PAAS

EXK

GPL

IT should be fairly obvious that there's a large movement and flow of funds in to the miners, traditionally (except during QE) they tend to lead gold prices, without QE they may again, but in any case, someone is very interested in precious metals in a big way. I prefer to trade in and out of leveraged ETFs like NUGT and DUST, but there may be some mining companies above that have decent dividends, I didn't look at those yet, but I will, that may make a longer term position even more interesting.