Individual investors are lathered up again and chasing the renewed stock rally, at least on a relative basis to their usual stance. This market sentiment indicator is usually a sign of impending market disturbance although timing is not finite with this data.
 Simple chart update turns opinionated [separate the two, as needed]… and the title is changed from ‘US Stock Market’ to reflect said opinions.
The first chart shows the progress the SPX is making on our 60 minute view. It turned up above the support level noted a couple days ago and is now logically dwelling at the pattern neckline. This is still bullish obviously, having made a higher high. Resistance and the measured target (blue arrow) are noted.
Switching to daily charts, the SOX is in a bullish looking short-term pattern, turning up from the first level of support in a zone we had labeled a ‘hot air’ zone (i.e. little support from 640 on down). A healthy and significant correction would take SOX to 560 at least. Two resistance levels shown in red will decide whether that is possible in the near term. I still hold Intel for fundamental reasons and a technical target, along with a chart buy on another Semi stock that will remain nameless because if its chart changes (from its current bull flag) it will be sold with no questions asked.
A brief excerpt from this week’s NFTRH 303 (check out the compelling historical ‘public opinion’ view of gold)…
Newsletter writers, in their effort to look right with the market, took a sharp turn toward bearish. So of course, the market then bounced hard.
I write all the time about bullshit detectors, cartoons and caricatures. I can be cranky, surly and intolerant of stupidity. I hate dumb commercialism and uncritical thinking. I want us all to be awake and dealing in reality, not giving up our critical power and dimly following someone else’s orthodoxies, especially those of so-called experts.
Of the negative feedback I get from public writing (outside of a couple whack jobs who periodically cannot keep themselves from sending along totally insane and hateful emails) by far the most frequent are along the lines of ‘I don’t know what you are talking about’ or ‘you fail to make a point’ or ‘this article is devoid of value and offers no actionable conclusion’ (hello SeekingAlpha, home of the linear, academic and/or auto-piloted paint-by-numbers thinker).
Anyway, I just stumbled upon the word ‘Situationist’, which I had not seen or thought about in years. It made me think about the Rabbit Hole and its idea of coming from a different place and seeing things from a different angle. Human mass-psychology is a big part of it but even more so, sociology. Why do people herd? Why do they accept the word of experts from on high?
I have entered a commercial phase with this website (why, just look at those ads) and in my market writing, no doubt about it. Within that I strive to be an honest and hard working writer because anyone who thinks they can add value to other peoples’ outlooks had better make sure he or she is not bullshitting themselves first, and not getting hung up in their own ego or self-congratulatory hubris.
The nearly 3 year bear market in gold turned my stomach not because of its price action (that was a breeze, actually) but because of what I saw come out of the orifices of so-called experts directed at a consuming public that depends on good information. When the shit hit the fan, many of the foremost luminaries simply cranked up the volume in dispensing the usual bromides, assumptions and hubris.
Over in the broad financial spectrum it is even worse, as the buttoned down financial services industry presents only the most surface view of the situation (PE’s, GDP, employment, etc.) without illustrating any mechanics whatsoever that are behind the creation of a boom phase that has featured improvement in these areas. The commodity is stock picks and the medium is coin, as in making some.
I was in a good mood yesterday, but ended the day with a bee in my bonnet and a lot of it has to do with the geopolitical problems in the world and the way that the mainstream financial media incorporates them. It was probably that headline with the ‘oil knows more than gold’ shtick that turned me.
Listen, everybody is trying to sell you something, including me. I think I have something of quality to sell you and I think there are other items of quality out there as well. But there is a lot of crap flying around and it is growing exponentially with the internet (which, they say, was supposed to liberate information?) and by my eye, in many ways it has put the Spectacle on steroids.
Now, I often talk about the markets being fun. That is because in my disgust I have an absolute blast seeing the colors and shades of this spectacle and trying to manage it from a vantage point of being separate from it, not a component of it. So when I don’t come with stock picks or guru calls as sometimes demanded, you know why; because we are dealing in decoding representations (in service of course, to proper investment stance) and I find that so much more interesting than stock picks at a casino filled with commodity obsessed patrons.
* Here’s the Wiki about Guy Debord’s Society of the Spectacle. I saw a Situationist art exhibit at the ICA in Boston when I was much younger, read up a little and found that so much of their outlook made sense with mine. Why have I always felt out of step with society and out of time with it? Because modes of mass communication are one big, spectacular representation (caricature) moving forward, feeding on itself. Commoditization and commercialization are compelling forces. Peoples’ assumptions held dear, in many cases, are commodities in my opinion.
Debord: “All that once was directly lived has become mere representation.”
And the winner of the Dumb Headline of the Day award is…
Here’s the MSM doing what it does in manufacturing headline topics to suit market events. Gold bugs had better hope that this hype stirred up by the media has been fully digested and that oil is indeed, right (man, I felt dumb just writing that).
I don’t care how many planes get shot out of the sky, who’s sanctioning who and what ethnicity hates the other, it is monetary terrorism at the hands of Central Banks that would make the case for gold. US and global policy makers have done little that is good or healthy on balance in the big picture, but that is not how they have been perceived these last couple years.
On the micro picture (2 minute chart below), if these volume/price bursts in GLD had anything to do with anything other than the monetary, they are meaningless. Steer clear of anyone telling you otherwise.
There is reason to believe the case for gold is improving on its own, but the hype and hair brained wrong headedness along the way is going to be annoying in its volume.
It works the other way around too. If anyone’s selling stocks on the geopolitical backdrop, they are acting emotional and not thinking right. This is no comment on what stocks will do. I still lean toward a bounce, especially if today’s reversal had to do with politics. Then a new shorting opportunity.
Now we’ll see what reality actually has in store for these markets.
- Because they remained bullish throughout a bear market while spouting slogans and dogma, keeping gullible people in the grip of a fantasy that they are comrades in arms against evil forces and that in the end, good will prevail.
In the end gold will be assigned its value, but there is absolutely no reason that people should have been hurt in the interim by holding the speculations that revolve around gold, especially at the behest of cranks, charlatans and carnival barkers.
These two charts can be found any time you want in the public charts list linked above.
First is a view of the near all-in state of the average mutual fund. And this is before the most recent surge higher, as the data are delayed by a month. As with sentiment indicators reviewed weekly in NFTRH, this is a picture of an ingredient that is properly configured for a market top or correction, but not necessarily an indicator of one. A correction or bear market is coming, with only the timing at issue. Risk is rising with every surge higher.
Meanwhile, the hatred of gold and silver continues unabated. Unbelievably, there have been times when people fell all over themselves to buy metal in Central Fund’s vaults for 20% and even 30% premiums. Now they will not even accept a 6.5% discount.
On April 14 I posed to StockTwits as follows…
and promptly received these…
Then the flags broke down.
Go here and read Dan Norcini talking about the cult of gold.
Backwardation, GOFO, JPM, COMEX, China buying… every excuse people used last year for riding the precious metals down as noted at this site and/or especially in NFTRH, Trader Dan is highlighting, eloquently and in more detail than I have probably ever done. As I recall, he is from the gold ‘community’. But he’s a rarity in that he apparently thinks for himself.
Why do I put the ‘ ‘ or ” ” around the word community every time I write that word after the word gold? Because the first time I saw it in a mass mailing from Mr. Gold, the leader from on high whose word is beyond reproach, I got a cold shiver. Then I wanted to puke. Then I thought about and wrote the word ‘cult’. It’s a cult.
This is not an EWI promo, just an observance. I am listening to he of the infinite patience and big picture perspective, the thoroughly lampooned (by bull wise guys and emboldened trend followers now promoting their own genius) Robert Prechter speak about hope and fear.
First, we’ll insert our weekly chart of the S&P 500, for reference. At the end we’ll include the monthly cycle chart and a sentiment cycle chart from Sentimentrader.com by way of NFTRH 285. People can then form their own conclusions.