Category Archives: Sentiment-Psychology

Contrary Indicator

I hesitated to post this because it puts an actual person up for ridicule, as opposed to the usual stuff I write about the “gold generals” or ‘stock market touts and trend followers’, etc.  A reader sent along an email containing this link (and its very bearish current view of gold) and the video below.

Daniela (Aug. 24, 2011): “…this [Fed's Op/Twist.] would create a bullish gold scenario?”

Puru: “Absolutely…”

also… “on the cusp of a massive uptrend in gold…”

Puru (Nov. 15, 2014):  “We are not prophets, but we must admit that we called the entire bear market in the metals pretty accurately. You will recall that in late 2011, we opined that perhaps the metals had seen the secular top and we noted a massive distribution pattern in the Gold Bugs Index.”

As I love to point out I screwed up with an HUI 888 target myself.  But I admit it, move on and never speak or write as if I know what is going to happen in markets.  I hate it when people do that because it makes other people think they have some kind of learned perspective as opposed to a pitch, which is what 99% of the financial media is.

The subject strikes a chord with me because Mr. Saxena wrote a decade or so ago that manufacturing was dead in the US.  I of course was one of those dead manufacturers and really had to shake my head about how financial types tend to be abstracted from the real world.

How about writing ‘in 2004 we opined that manufacturing was dead in the US and not going to come back’?  How about that one Puru?

 

Negative Feedback 2; Points Proven

A couple weeks ago I wrote a post about some negative feedback (comes with the territory, if I am doing my job well enough) because I wrote about the very real economic performance that has so far come out of what I consider unsustainable and doomed to fail policy (and would be bullish for the gold sector I might add).

So I get to have some people call me a perma bear on one side and certain dogma defenders on the opposite side, both coming down on the writer who, right or wrong, is trying to clear out the b/s and just write the truth.

Now with the Gold Bug Psychology article I unsurprisingly I got the incoming from that camp as well.  Even though I am twice the gold bug some of the dogma defenders are because I am not threatened by my position and am willing to state the truth as I see it.  Nobody that I know of has put in the effort I have over the last decade in trying to describe gold as a value instrument and an insurance policy… and NOT a PLAY or a GAME.

Anyway, I give much credit to the gold websites (GoldSeek, 321Gold and Gold Eagle), each of which published or linked the article after it was submitted.  I’ll reserve comment on some of the readers though, because some of the responses have been all too familiar and are not bullish for gold either.

From GoldSeek comments, the same forum where above noted feedback on my supposed pro-economy stance came from…

The writer has the psychology of short-termism and of throwing in the towel.

The commenter obviously has not read me.  Throwing in the towel, eh?  I am waiting for him to do that and have been for years now.  I am going to become so bullish on the price of gold and especially gold stocks (for all the reasons this post doesn’t have the time to go into… again) when people stop defending their positions and when the macro funda that actually matter come fully in line (they are not).  I am already bullish on the value of gold.

I sum up the author as follows…

Incorrect Groupthink: Gold is money for the individual, and under the control of the individual

Correct Groupthink: Central Banking with paper money, for the greater good, decided by ivory tower wise men

What I find strange, is that he then comes across as being a part of the gold community…

***************************
“Current Situation

So where are we at?”
***************************

All after accusing the gold community of “groupthink”, and following pied pipers as if they were heroes.

This commenter actually thinks I am part of the evil conspiracy, ha ha ha… me!  Biiwii, a site that has proclaimed the virtues of gold’s value proposition for a decade+ and shit all over the Federal Reserve’s policy for that same duration.  Sum me up any way you want my man.  Then after doing so why not go back and read some of the millions of words I’ve written over the last decade.

“The precious metals bear market, beginning with silver’s blow out in early 2011 and the general top in the commodity and ‘inflation trade’ along with gold’s lesser blow out later that summer amidst Euro crisis hysterics, has been all about psychology”

Wrong because of one word. Change “psychology” to manipulation. It is manipulation that is the trigger, and psychology is only the reaction. The ignorant and biased author needs to learn the difference in cause and effect.

And his groupthink comment is just plain stupid. So are all people who do something, who buy the same thing, engaged in groupthink? Are all antique car buffs suffering from groupthink because they all like old cars? How about all the women who buy jewelry? Are all skiers under groupthink because they enjoy gliding down snow covered mountains on two pieces of wood (or fiberglass or whatever)? Or perhaps more relevant, are all homeowners who buy insurance even though their house has never burned down suffering from groupthink?

Terrible article, really written like a jackass.

Thank you for making my case.  When you stop calling names and when position defenders in general at least stop to consider that someone who is on your side (in your perceived war) is actually trying to help, we’ll be ready to move forward.

Sincerely,

Jackass.

 

Gold Bug Psychology Must be Neutered

The precious metals bear market, beginning with silver’s blow out in early 2011 and the general top in the commodity and ‘inflation trade’ along with gold’s lesser blow out later that summer amidst Euro crisis hysterics, has been all about psychology.  Well, every bear or bull market is about psychology, but the intensity of this dynamic has been something to behold in the gold sector over these last few years.

Psych 101

In early 2011 long-term interest rates were rising in response to inflationary pressures, ‘Bond King’ Bill Gross famously shorted the long bond, virtual mobs with pitchforks were storming the Fed’s castle calling for Ben Bernanke’s head and silver went to $50 an ounce, with calls for $100, $200, etc.  All psychology my friends.

While on the subject of the long bond, our ‘Continuum’ chart shows that players did not learn 2011’s contrarian lesson with respect to yields as they took Wall Street’s ‘Great Rotation’ hype hook, line and sinker in 2013.  What did the 30 year yield then do?  Why, it hit our long-term limiter (monthly EMA 100, red dotted line) and has dropped ever since.

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Pigs on the Wing & Sheep

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Roubini Loses His Way

Was Nouriel Roubini ever on course or has he just managed to bottle up a lot of PR in attaining his ‘Doctor Doom’ descriptor?  I don’t recall too many times reading the Roub and thinking ‘man, this guy’s a groundbreaking thinker’, so I lean toward giving him his props as a great self-promoter.

Nouriel Roubin – AKA Dr. Doom – warns of rising risks around the world

Anyway, this MarketWatch article describe’s the Roub’s latest warnings on global markets, featuring these risks…

  1. Terror attack in US or Europe
  2. Russia-Ukraine or Syria conflicts could spread
  3. Hong Kong protests and more

Honestly, I have no clue how some people assume the mantle of mass appeal and respect.  The 3 headlines above are the most cartoonish and idiotic pap I have read all year in a mainstream media that is all about cartoons and pap.

Think about October, think about the media and its starring cartoon characters on the job getting people all worked up.  While I am enjoying this drop in the market so far, the word on October is probably that it will be an opportunity to get bullish one more time.  At least if the Roub Indicator (RI) is still functioning well.

Gross Hype of the Day

In a stunner, the bond and fund worlds go nuts as the Bond King moves from PIMCO to Janus and JNS rams upward by 32%.

jns

Wow, the man who almost single handedly installed the 2011 red arrow on our T Bond yield ‘Continuum’ amidst the most intense inflationary hype of the post-Greenspan era is going to Janus.  Hey, great.

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Hulbert HGNSI and Gold

First off, I want to say that the plan explained by Steve Hochberg in the video associated with the previous post (free sign up required) meshes well with how I see gold currently.  The 1000 +/- level is very doable, folks.  Not a given, but quite doable.  That would close out investors’ fear from 2008 by having made a completed cycle on the rebound in greed.

In the short-term, gold was probably ready to bounce even before the war stuff hit the news yesterday.  Sentiment had become just deplorable, with gold bulls puking left and right.  The geopolitical thing is a negative, as it always is but the Hulbert HGNSI is quite a positive, as the gold timer community (ha ha ha…) plummets well into net short territory.

hgnsi

So, geopolitical aside (and I always take that seriously as a negative for gold because it gets the worst of the gold “community” back to pumping) gold can see some decent rally activity off of sentiment and the improved Commitments of Traders structure.  But I think more downside may follow over the next few months.  Then?  Cyclical bull.

Meanwhile, I am using gold as a macro tool; probably the best macro tool I have when comparing it to other assets that are positively correlated to economies.  Gold is just a tool around here after all; a tool for market evaluation and a tool for monetary value.  It’s not an idol.  When the ones who obsess about gold with wildly glaring eyes are back on the pump, take caution.

Separately, also at MarketWatch we see that the word is getting out that these ‘golden’ and ‘death’ crosses that inexperienced TA’s often get hysterical about are indeed opposite to the hype.  The supposedly bullish golden ones are more bearish than the death ones.  Too funny, and sadly all too true.

What I like about market management is that there is no shortage of bullshit out there to decode and debunk, but casual observers tend to take it seriously.

Gold is Finished!

Once again, clicking the graphic yields the article, which I am not going to bother to read.  The headline is all I need to put in the analytical blender with other factors that indicate a coming low (easy now, it could still be well lower) could be an important one.

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BBRY Bounce, Trader Psychology

It was mentioned in a post last week that NFTRH+ idea BBRY had reached target #1, a good time for profit takers to do their thing.  It was also mentioned that I had not decided whether or not to sell because there was a longer-term target up significantly higher.  Doohhhhh!  I held it and had to sweat the SMA 50, which was pretty much my stop loss (actually very limited profit) line.*

bbry

Today it appears to want to bail me out of my predicament, where acceptable profit is now there for the banking again.

But this illustrates a weakness of mine as a trader.  I tend to think ahead in rational terms, but on the short-term I tend to forget all that and get a little emotional for not having taken profitable action when it was there for the taking.  In other words I either conveniently forget who I am as a trader (lack of discipline) or try to be two traders at once**, with each of these wise guys not fully aware of or respectful of the other.

Hmmm… sounds like I’ve got some work to do.

* I find those pretty easy to abide however (discipline), most recently booking a disappointing, though limited loss in CTRL.

** I am not talking about having different investment outlooks and associated time frames, which I often do.  Talking about within one trade.

AAII Sentiment Elevated

The ratio of bulls and bears in the latest AAII sentiment survey is unhealthy for the stock market on the short-term view.  In fact it is as close to as unhealthy as it gets during the cyclical bull out of 2009.

Sentimentrader has a cool new chart engine that allows you to dial back a chart to historical views.  This one shows a declining trend in sentiment during the Greenspan era cyclical bull (2003-2007) and a rising one on the current cycle.  This one may be destined for higher highs in sentiment before it flames out.

But the recent cluster of spiking activity is sufficient to get a good correction going in the interim.  That said, over bullish sentiment is a condition of a top, not a directive.

aaii

 

Here’s the up close (2014) view showing a level of 73, nearly matching the one that brought the January market disturbance.

aaii.2

Ukrained… Again

To the extent that stocks are down and precious metals and crude oil are up on Ukraine and Russia?  Well look, you have probably been to this site enough to know my views.  I won’t badger you about it.

headline
Headlines from MarketWatch

Nah, check that.  It is often not advisable to buy precious metals on up days and it is never advisable to buy them on up days with negative geopolitical headlines and upwardly revised GDP.

Just a public service announcement from the website that deplores casino mentality, lazy analysis and people who do not think beyond cartoons.

I actually bought USO for a crude oil bounce play yesterday and now am forced to at least consider taking a small profit sooner than expected.  These events do little more than rile up the markets in the short-term.

Gold Hatred and a Long-Winded TA Screed

We are operating to parameters on a would-be gold sector bottoming process, which has been a year+ long grind (‘grind is good’ as it absolutely ruins peoples’ nerves over time) and which by the way, everyone sees now as either a final bottom or a consolidation before the final and spirit destroying wipe out, depending on their Team’s hopes and aspirations (bull or bear).

About a year ago NFTRH projected two possibilities (within the context that it was only in the realm of potential) and they were a ‘W’ bottom or failing that (it promptly failed) an Inverted Head & Shoulders on the HUI.  Today a new pattern has joined the IH&S and it is a Symmetrical Triangle, which would be a consolidation before the final crash.

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