Category Archives: Sentiment-Psychology

Hear That Sucking Sound?

By Biiwii

Hear that sucking sound?  It’s called draining confidence and a market sentiment & psychology shift

Remember all that confidence, beginning as a glimmer in the eye of Bernanke’s big brain (weird wording, but ever heard of the ‘mind’s eye’?) and tended with paranoid attention every step of the way by hands-on policy that simply refused to go away.  Every time the stock market hiccuped there was the macro manipulator in chief; “the HERO” to legions of conventional stock market players.  Well now that confidence is going away.

the hero, ben bernanke

Just as Bernanke was left with Alan Greenspan’s toxic mess to clean up, Janet Yellen is dealing with the aftermath of Bernanke.  She has really put a good face on trying to do the right thing as per a conventional economic recovery.  As noted last weekend in NFTRH 381, I actually have a relative level of respect for her compared to some of her global counterparts.  Okay, that is as doughy eyed as I’ll ever get toward a centralized monetary authority.  This is all about confidence.

Here comes CNBC with the punch line…

Yellen on negative rates: ‘We wouldn’t take those off the table’

That my friends, is another chink in the armor of formerly ironclad confidence this institution had rebuilt around itself in the form of conventional money managers and other peoples’ money.

As recession fears mount in the U.S., Fed Chair Janet Yellen conceded there’s a “chance” of a downturn ahead.

Oh really, she concedes that now?  How about last summer when we, who have got to make our bones in this eff’d up market clearly illustrated the first signs of it?

Machine Tools Fading

Or several Semi book-to-bill ratio releases that were on display for months, for anyone who would care to make the effort of knowing reality?

Semi Book-to-Bill Ratio Decelerates as Expected, Semis Not Under Valued

Now all those conventional economists (including evidently, those at the Fed) are coming around?

And then the punch line…

She also said the central bank is studying whether negative interest rates would help should conditions worsen.

And so, confidence ratchets down one more big notch.

spy vs. gld, stock market vs. gold

Flattened Out

By Biiwii

The Stock market is at do or die support

[edit] I just realized that if this chart were in text form instead of graphical form it would say “okay Janet, here I sit… so what was it you were planning on saying tomorrow?  Hmmm?”

With the S&P 500 right at do-or-die support per this chart (absolutely critical, but not particularly strong support), I have done more flattening out after yesterday’s post noting a short cover of GS and a sale of TLT, each very profitable positions.  I just don’t think it’s a market to be caught gazing at your successes in, unless you want to get your eyeballs ripped out.

s&p 500 weekly chart

So shorts on the Pigs (KBE) and the Emerging Markets (via EEV) were also covered today, leaving two moderate and un-leveraged short positions open.

As for the gold sector, I have gotten too many emails from people getting nervous about whether or not to pile in.  ‘No, please have patience on taking new positions, the sector is over bought’ was the gist of my replies.  We covered the sector extensively in an NFTRH update last night.  I took some profits there and hedged the rest.

Cash is my favorite thing right at the moment, after noting in NFTRH 381 that I considered my own cash position to be too low.  Now I am more comfy.

We also covered the stock market and a bit more on gold in an update today.  We talked about remaining calm, patient and realizing that 2016 is going to be a year filled with opportunity both long and short across multiple markets.  There will also be opportunities to preserve gains along the way, and that is what this week is shaping up to be.

As for the chart above, that is one ugly mess and it must not make and hold a lower low to January; and that is exactly the point.

George Soros is Short!!

By Biiwii

Soros Reveals He is Short the S&P 500: Warns China Will Have a Hard Landing, Says “Fed Hike Was a Mistake”  –Zero Hedge

You might count the number of times George Soros says “deflation” or “deflationary” in the interview linked below.  I didn’t, but it’s a lot.  I recall a ‘George Soros short the S&P 500’ headline from well back in the bull market.  That did not work so well for the bear case.

This is media (in this case, Zero Hedge & Bloomberg) muckraking at the worst of what is a market sentiment “Tinder Box” (ref. NFTRH updates, projecting a short-term bottom and bounce potential based on Sentiment, among other things).

You can get the article and video by clicking the image.

george soros interviewed

Personally, I am glad to see this because I covered my Emerging Market short yesterday and am net long the US stock market.  It felt uncomfortable right through yesterday, but if you’re going to play swings (long and short) in this market you’ve got to buy the media’s trend following… and sell it too.  Right now things have gotten too bleak, including the likes of ole’ George here.

Pre-market looks like it wants to back up my stance.  But in this market, I’m ready for anything.  Yet this Soros noise helps, not hurts, my short-term view.

Major Tech Run Ahead, More Pain for Gold: CNBC

By Biiwii

According to something called Crackhead Trading Nation at CNBC, tech is about to begin a major run like it did post-1994 and gold, in a downtrend and bear market, is going lower.

cnbc, technology and gold

Thing 1 uses some cool charts to show why  “We’re still actually in the early-to-middle innings of big-cap tech outperformance that we do expect to continue over the coming year,” Wald said Monday on CNBC’s “Trading Nation.” but also mitigates that with a fundamental analyst who notes that growth – which you may recall was the craze back then – is nowhere near the same in tech now.

Thing 2 uses a short-term chart of GLD to show the bounce about to fail.  I think I met this gentleman, if he’s the same Rich Ross, when I visited the late Jonathan Auerbach’s shop (Auerbach Grayson) several years ago.  Ross is a nice guy and a good chartist, again if it’s the same Rich Ross.  I think that’s him.

Anyway, gold is in a bear market but I think it is kind of like shooting fish in a barrel at this point.  The only reason for this post is to illustrate the contrarian ‘pair’ trade that CNBC has presented for its astute viewers, at least those with the attention span beyond that of a gnat.

Armstrong on Time, Price and Gold Manipulation

By Biiwii

Time & Price

“They then form groups and ask for donations to fight manipulators, whom they pretend are perpetual, when in fact, the entire commodity sector is in crisis, no less the deflation that is destroying the economy.”

Since we have been on the subject lately, conjuring Armstrong in Saville’s post and conjuring GATA from my own recent experience (Thing 1 @ Biiwii & Thing 2 @ NFTRH) I thought this post by Marty was interesting.

His negative tone toward gold manipulation propagandists seems to me to be the result of much input from the hard assed end of the gold bug spectrum.  They are like a mafia you know, and they are not open to discussion about opposing views.  That is the fatal gold bug flaw… the surety with which they go about their business.  That is because after all, uncovering the crimes of the evil manipulative interests IS their business.  And business remains good, with lots of customers still buying.

Again, there is manip in all markets.  Why is it so publicized and turned into a cottage industry in gold?  What about all that oil manip?  The Euro is being manip’d right now, today with Draghi talking sweet somethings… in gold the true believers are the marks.  I am a believer in gold.  But not to the extent that I am going to let this monetary asset – with a particular place in an overall portfolio and an overall life – hurt me.  Keep religion, politics and ghost stories out of it!

[edit] In re-reading Armstrong’s quote above I can’t help but wonder if “the deflation that is destroying the economy” (well, it isn’t yet in the US, that must be a projection as exports/manufacturing are the ones suffering as we have shown in breaking down the Payrolls report and finding consumption and services still going great guns under the regime of a strong dollar) is going to be the thing that makes the distortion in this chart finally resolve with negative consequences.

irx and spx

In 2008 we had financial and market manipulation with the employment of ZIRP.  Then we had inflationary manipulations 1, 2 and 3 (QE) along the way.  But the greatest manip of all was the brilliant, evil genius of Operation Twist, which croaked gold (silver and commodities had already blown out earlier in 2011) and painted Goldilocks right into the macro picture.  The Fed’s own word was “sanitize” when it talked about making it look like there was no additional inflation being promoted.  They did this by selling short-term T bonds and buying long-term T bonds (i.e. neutering the bond market).  Voila!  A manipulation so simple as to be child’s play; just sell these bonds and buy those bonds.

But then we realize that the markets are made up of we the many participants (investors, traders, HFT’s, casino patrons, substance abusers and yeh, the algos and black boxes too).  We are (mostly) part of nature and nature always seeks to have balance.  That is why I so often post the ‘distortions’ chart above.  I wonder if the market will slowly come into balance in the form of the deflation – kicked into gear by the Fed’s own Op/Twist 4 years ago – that Marty projects will go on to destroy the economy.  Just riffing here…

GATA’s Ed Steer Has Never Heard of Me…

By Biiwii

From Ed Steer’s latest gold bug infomercial posted at Goldseek…

“Ted Butler’s mid-week commentary got accidentally posted on a website I’ve never heard of—nftrh.com—and by an ‘analyst’ that I’ve not heard of either.  I’ve read what he had to say and you can safely ignore it.  Just scroll down to Ted’s commentary as it’s an absolute must read.”

Well Ed, I have heard of you.  You are the Director of the Gold Anti-Trust Action Committee, GATA.  When I was young(er) and impressionable, I actually gave your perma-ghost stories some weight.  Ed, you have never heard of me except for that time when I wrote something bullish about gold and GATA just happened to pick up the story and publish it for the troops.

Also Ed, maybe you do not read so well.  Ted Butler contacted me, and gave permission to reproduce his emails.  I was just doing what I always do, not swallowing perma-conspiratorial b/s and trying to go by what the market tells me to do.  Mr. Butler is respectful and courteous.  You seem to be aloof and ego bound.

Reference two posts of mine trying to figure out the bearish silver and gold CoT reports last week.  I had been warning of the bearish formations since well before the big drops in the metals.  Were you warning your readers sir?  Does it really matter how the CoT got so bearish when the end result is the same?  This is not a battle of good vs. evil, it is the financial market.

Who Exactly Are the Goons Gathered Against Silver and Gold in the CoT Alignment

More on the Silver and Gold CoT, w/ Ted Butler’s Comments

Oh and Ed, I suspect that while you profess to have never heard of me, you may subconsciously associate my name with some items from the past, including…

Scary Gold Bug Article on Cue

GATA posted a laundry list of gold bug heroes moments after the Fed punted on tapering QE.  That was September of 2013.  The gold “community” thumped its chest, was summarily mowed down (again) and it was all so predictable.  It is no wonder that so many of the troops now stand in line with Martin Armstrong.

I already know the script Ed.  Gold is going to enter a big bull market and you are going to be a poster boy, thumping loudly as the evil interests are vanquished.  But what I have been concerned with was the inconvenient 4 years (to date) of bear market that had to be dealt with.  You blamed criminals and I said ‘okay, maybe, maybe not… but we should not get caught up in the cross fire’.

People who understand the long-term value of gold as a monetary asset don’t tend to worry about manipulation anyway.

Sentiment Viewed Another Way, Small Caps

By Biiwii

A feature of the current sentiment backdrop is that people seem to be looking for market indicators (reasons) to be bullish as opposed to bearish.  I mean, if you watch this site you know how keyed I am on the Semiconductors, as they were a post-2012 market leader.  They led into the August correction and led right back out of it.  Yey, everybody’s bullish on the Semi’s!  Woo hoo!!

But why are we not hearing about another post-2012 leader, the Small Caps?

Here is the weekly view of IWM.  Why is the rebuilt bull backbone not factoring this?

iwm weekly chart, small caps

Sentimental Pictures

By Biiwii

Let’s look at some pictures of what was formerly a totally bombed out market sentiment backdrop.

From Market Harmonics a look at RYDEX fund sentiment, fully recovered from the August freak show.  Notice how volatility has expanded since Central Banks started becoming more aggressively intertwined with markets since 2011?  Hmm?

rydex, market sentiment

From Doctor Ed by way of Investors Intelligence, a look at the II (newsletter writer sentiment) as of October 20, a couple days before Amazon, Alphabet and Mr. Softie launched the good times, good feelings and presumably the need for the newsletter boyz to adjust to being ‘right’ with the market.  As we noted in #366 this week the bulls were recovering nicely but the bears got a little too eager too soon, holding the ratio down.

Continue reading Sentimental Pictures

Market Sentiment Reset

By Biiwii

First headline I saw at Marketwatch this morning:  Why a fanatical run higher may be shaping up for stocks

First headline I saw at CNBC this morning:  Fear of ‘missing out’ will drive markets: Technician (click image for article and video)…

cnbc, stock market rally... market sentiment reset

[edit] The guy in the video is actually rational and echoes my thoughts on Biotech at the time of the liquidation.  The lady is a little more crackish; another chartist heard from…

NFTRH 365 Market Sentiment Bottom Line:

“Folks, the over bearish backdrop that was a big concern for bears not even a month ago is being eliminated.  The stock market bounce is doing its job.  While SPX continues to target the 2020 to 2060 range (with an outlier possibility for 2100 +/-) the backdrop is now one of rising risk to the sentiment bounce rally.”

Here is but one of the indicators we used to support the above, Sentimentrader‘s Smart/Dumb money data graph.  If you look closely, you’ll see that aggregated dumb money has aped the bottom and bounce in the S&P 500.  Now we are poking up into the target range with the media telling newly greedy investors what they want to hear again.  Well, they were doing that in August in September as well, but investors wanted to be fearful back then.  Not so now.  The bounce is doing its job.

market sentiment, smart money and dumb money