Category Archives: Sentiment-Psychology

“FrankenMarket”

By Biiwii

“…this is a Frankenmarket of their own creation…”

Ha ha ha, good one Chris.  I see my phrase resonated well in 2004.

Anyway, Chris Martenson can talk like nobody’s business.  I cannot verbally express myself the way he does.  Not nearly, not publicly.  He once woke me up with a late night phone call going on with the energy of a true believer, and I’m like ‘wow this guy is driven and on a mission’.  Me paraphrased:  ‘Ya ya ya Chris, things are bad and I think it’s great you are going to [oof, I am still listening as I post and I just heard “deflationary impulse”, another Biiwii-ism, although to be fair I’ve heard that one around elsewhere over the years.  At least I have not heard ‘Inflation onDemand’© or the ‘Continuum’© going around the internet] try to tell the world about it… hey, what time is it, anyway?’

Doctor Martenson came from the same group of alarmists that I came from early in the Greenspan Inflation around 2002-2004.  It is one thing to be alarmist (we were proven correct in 2007-2009, but my preferred tack was to play these macro swings driven by out of control policy.  First off, secure true monetary value (hint hint) and second, get rid of personal, and in my case business, debt.  Then go forth and speculate (this included bullish stock market positions in 2003-2007).

Where I disagree with certain types of gold bugs and alarmists is that you do not live your ideology or even your deepest held beliefs on a daily basis; not in the financial markets you don’t.  You continually remain vigilent as to negative potentials and you go forth and you enjoy life as best you can in sometimes insane circumstances.  But you do not scare the shit out of people in the here and now, because most of those people receiving the information are going to make emotional moves in real time and then… the macro crawls along ever so slowly to where it is going.

That is why I tune these things down, despite the obvious intelligence of the speaker.  It’s all psychology my friends.  I put the Armstrong input I get in the same category.  These are the financial markets, not some war of ideology.

This interview came my way via LinkedIn.

[edit]  I have not listened to Chris in a long time.  How long has he been talking about deflation?  I thought the big focus had been on inflation.  The contrarian in me is curious.

Armstrong Phenomenon

By Biiwii

I call it a phenomenon because not since being bombarded with Jim Sinclair-isms last decade have I taken in so much input centering around one man and his unique view.  Not since ole’ Jim has this input been so unquestioningly in line with the view of the guru producing it.

Usually I use the word guru in a negative light, meaning something closer to charlatan or promoter than anything positive.  But with Martin Armstrong I don’t feel that way.  Indeed, the main thing that makes me uncomfortable is not his theses (from what I gather from my email contacts).  It is that he seems to have come from the very place he scorns, the gold “community”.  I seem to remember him being held up by Sinclair many a time as a bullish gold forecaster.  I have heard from several people who have pretty much converted to Team Armstrong from Team Sinclair (CIGA anyone?).  :-)

Continue reading Armstrong Phenomenon

MSM Working Gold Hard

By Biiwii

MSM mainly reflect back to us the ‘news’, what is or has happened.  MSM, especially MSfM, never give the straight scoop ahead of time when it is actionable.  Anyway, gold is down big this morning (partially recovered) and it’s pig pile time in the financial media.

This screen shot is taken from the Live Gold & Silver page of the much improved Live Charting menu above.  Very nice tools there now for all markets (more may be added).

gold

For its part, here is MarketWatch chiming in to help investors realize that gold could keep on crashing.

This is what could keep gold crashing

Clearly, the precious metal hasn’t been helped by Friday’s news that China isn’t holding as much gold as originally thought and by signs the Fed will go ahead with an interest-rate hike. But ponder this question from WSJ’s Jason Zweig, posed in a commentary as gold settled at five-year lows Friday (and kept falling Monday): “So why, even as Greece has defaulted, the euro has sunk against the dollar, and the Chinese stock market has stumbled, has gold been sitting there like a pet rock?”

This Zweig thing seems to be everywhere.  Viral.  Some guy putting out a contrary indicator media piece years after it would have been useful and it is viral?  Well, in the opening segment in this week’s report we addressed this before moving on to the analysis.

Let’s Talk About Gold

“From a contrarian’s perspective, this is the kind of stuff that is going to help empty the still over-bullish side of the boat (after it capsizes) and temporarily break the gold obsession that is hard wired into so many people (it’s just a pet rock, after all). Here we have to remember that when the MSM trumpets, it is selling headlines. Who buys the headlines? The public. Who is always wrong at important turning points? The public.”

Check out the whole segment linked above.

Hey, Did You Know…?

Psst… hey, did you know that US stocks snapped a win streak on violent Greek protests?  Hmmm, well did ya?

That’s what MarketWatch’s front page headline is declaring after the close.

How about this alternate headline?

US stocks snap win streak on slightly over bought, post-hype recovery momentum; market experts say it is a normal process for a slightly over bought market

Doesn’t have quite the same panache, does it?

The article also features Janet Yellen’s mug and this…

“Yellen seems very committed to raising rates and is doing everything she can to lessen the blow,” said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research, in a telephone interview.

This age of transparency (i.e. Jawbones on parade) is a boon for the mainstream media, who eat up everything they utter and feed it out there as if it is news.  Just last week some Jawbone was talking rates into 2016.  The volatility that ensues does nobody any good other than the MSM, as it chases market sentiment around on a daily basis.

Meanwhile, Intel beats and Netflix sky’s on earnings.  Too funny.  But wait, there’s still those violent Greek protests to deal with.  Ha ha ha…

[edit]  Oh and INTC’s beat does nothing to hurt our boring headline from yesterday, does it?

Semiconductor Leadership; Intact

 

Market Management; Remember DDD?

By Biiwii

Yesterday I made a post about the Semiconductor sector’s technical market leadership.  There are other considerations as well, not least of which is my own background in manufacturing and in particular, the state of the Semi Equipment segment within the general Semi sector.  I am not trying to hype anything, I am trying to be logical and if the technical and fundamental aspects marry up, there will be a trade here.

The technicals show that leadership is still in its trend channel per the link above.  They also show a nominal SOX index that dropped hard to around a point where those fundamentally bullish would at least start buying.  We have previous history (up to May) showing very strong Equipment sector bookings and we await new data to be released later this month.

In managing markets, you have got to have themes in play, plans extrapolated from those themes and above all else, an inclination to admit when you are wrong and revise those plans.  For now, we are on a Semi plan.

One plan that never needed a revision was the ‘Wall Street and associated media were printing up a big plastic model of HYPE for investors to suck on’ that I harped upon continually.  This site, due to my manufacturing background and familiarity with 3D Printing and Citron Research with a 3D Systems-specific bear view were the only places I can recall that called this promotion a scam at the heights of the bull frenzy.

3D Printing; no Barrier to Future Losses for Investors

ddd

Stratasys is the ‘best of breed’ in the sector and it too has been destroyed from the bad old days when the promotion was running full steam.  The stock market is higher than it was in February of 2014 and yet this entire sector sought out its true value just as the best laid plan thought it would.

My point is not to chirp and harp (well, maybe a little) but rather to continue to expose the b/s that runs 24/7 in this casino.  In October 2014 we had a hysteria in the Semiconductor sector centered around some stupid comments by the CEO of Microchip Semi.  He issued a PR talking about soft forward business and then the media popped its load falling all over itself spreading the grim news about the view of this key ‘canary in a coal mine’ company (hint: a better ‘canary’ is actually the Equipment group, which supplies the chip makers).

The point?  Hype is everywhere *, in the micro (company-specific like Microchip Semi; no pun intended), the macro (Yellen now blabbing about rate hikes still to take place in 2015 after some doofus at the Fed used the little blip of a correction last week to talk about pushing rates out to 2016) and it comes in positive and negative form.

One day when there is no longer a Biiwii.com (which will probably mean there is no longer a me) I want people to simply remember it as a source that hated hype above all else.

Okay, market’s opening and I’ve got to go manage it (which hopefully means doing nothing if I am properly positioned).  :-)

* I forgot to include the greatest hype of all time, from Stratasys and 3D Systems, some absolute gems talking about printing football cleats (during the run up to the super bowl) and Hershey’s treats.  Unbelievable. 

2 Charts Did Not Buy the Negative Hype

By Biiwii

As noted in NFTRH 351, the ratios of Junk bonds to Treasury and Investment Grade bonds were not buying the negative Greece (with a side of China) hype.  There was no fade in the underlying message that speculation was still brewing beneath the surface of the stock market.  Indeed, during the drama Junk-Treasury actually got above resistance and turned it to support.

hyg.tlt

hyg.lqd

Ritholtz on Gold

By Biiwii

I linked Barry Ritholtz’s gold bug swipe along with other items in an Around the Web post.  Anything linked (or republished from guests for that matter) on this site is to be taken as 100% their view, not mine.  You, the reader are tasked with using your own brain to consider, discount or ignore any of it as you see fit.

What do I think of Ritholtz’s view on gold, personally?  I think ole’ Barry is picking some easy, low hanging fruit to use up virtual ink over at Bloomberg, per his contract (real or implied).  I mean really, gold did not react to Greece and he takes that as a negative for the metal?

The fact that gold did not do what legions of promoters and fear mongering pitch men insist it is supposed to do is a positive, not a negative.  It brings us closer to the resolution of the bear market as opposed to delaying it with fear mongering promotions (ref. last summer’s Russia-Ukraine-Ebola triple play of unsound ‘fundamentals’).

Gold Shrugs Off Armageddon

“I thought gold was an investor’s best friend during Armageddon.”

Really Barry, I think that you have gotten caught up in a personal ‘back and forth’ with the more unsavory of the gold bug “community”, as Daddy Gold Bug Jim Sinclair calls it.  You are using the same cartoons in reverse that the worst of the “community” uses when it tries to stir fear and greed in naive cult members followers.

As those of us who actually care about reality (as opposed to media-driven hype) have tried to point out repeatedly over the years, gold is not about Armageddon (Bird Flu, Ebola, Cyprus, Greece, war, death, destruction or any of that crap).  Gold is simply a marker, a barometer showing the state of confidence in the financial system and its managers (Central Banks) at any given time.

“Further reducing enthusiasm for gold is the gradual improvement of the U.S. economy. Despite forecasts of imminent collapse, the major economic data — including employment, wages, spending, housing, autos and consumer sentiment — have all trended higher over the last five years. Tales of an impending depression were greatly exaggerated.”

I could not agree with you more, Barry.  Back in 2012 we began gauging big breakdowns in the technical case for precious metals and by January of 2013 we (well, NFTRH) cross referenced the ratio of Palladium (cyclical) to Gold (counter cyclical) with a ‘channel check’ of the Semiconductor Equipment industry to put forward a view that an economic bounce – beginning in manufacturing and later to spread out to the services sectors – was likely to come.

I am a gold bug.  I saw the “improvement of the U.S. economy” when it was appropriate to see it, ahead of time.  When you obsess on the other kind of gold bug, the media star with the Armageddon-like predictions and inflammatory ‘analysis’, or Kool-Aid drinking hate mailers, you do a disservice to your readership because you only present the other side of something that is not real to begin with.  You in essence stand up a Straw Man and periodically set fire to him, really to no one’s benefit.

“Regardless, gold seems to [be… jeez msm, edit much?] going nowhere fast. Feel free to send me an e-mail explaining how wrong and stupid I am. I have an archive of all the messages warning me that gold would teach me a lesson in humility. “You’ll see” these e-mails smugly assure me, “your comeuppance will be here any day now.” My plan was to respond to each on its fifth-year anniversary with a chart showing the performance of gold versus all other asset classes and the details of how much money has been lost.”

Gold is going to be relevant again when confidence wanes and the current boom cycle starts to show its age and reveal its unsound origins.  Until then, gold is a dumb rock that people can hold as insurance and nothing more.  That is all it ever was, anyway.  But that does not sell in the mainstream media to mainstream people.  Cartoon-like depictions of half insane Luddites clinging to that dumb rock do.  Media stars lampooning those Luddites do too.

Hype in the “Community” is Always Punished

By Biiwii

IKN has been pointing out the stupidity of some Apple Watch gold consumption hype and most recently, the non-flight to quality amidst Greece blah blah blah… He is at least as sensitive as I am to this stuff.  More so, maybe.

While I have personally tried to tone down the criticism of the cartoons in the gold “community”, I find it difficult with one writer in particular leading the naive into the GDX (with its “drop dead gorgeous bull wedge”), into the Indian Wedding and China demand stories and as a topping on the cartoonish cake, the ‘US jobs will drive inflation so make like the smart money and BUY GOLD before the big institutions do!’ garbage.

I get irritated by this stuff.  Some people call me sanctimonious (while cherry picking and misinterpreting a chart I put up) and I call myself judgmental, for sure.  That is not really a great trait to have, but at least I know who and how I am.  Speaking for the defense, this is mostly applied when I think that people are being misled to their potential harm by stuff that they are reading and assuming is authoritative.

News flash:  Nobody writing on the internet in general and the financial media in particular, is authoritative.  Present company included.

Last year at this time Ukraine, Russia and eventually Ebola were stoking up.  NFTRH kept a constant warning in force that the rally in the precious metals complex was happening for the wrong reasons (i.e. trade it, but don’t bite on the b/s).  Right out front beating the bull drum were some of these entities about which I am highly critical today.  The result for last summer’s unsuspecting true believers?  New freaking lows in gold, silver and the miners.

It was interesting because last summer NFTRH experienced a temporary net decline in subscribership.  I thought it was just a typical summer drop off, but I also could just feel certain gold aficionados in the base getting fed up with me.  You can always sense when gold bugs start dropping off.  It tends to happen when I don’t tell them enough of what they want to hear.

This summer (so far, anyway) there has been no drop off and indeed there has been a slight increase in net subscribership.  The only way I can explain it is that we have been fully prepared every step of the way for the bearish things happening to gold, silver and the average* miner.  That along with the fact that we have been bullishly managing markets that have deserved to be managed, unlike the precious metals to this point.

In other words this summer I am not being punished for being negative because precious metals prices are not running upward, making charlatans with nicer things to say look like gurus.  People are valuing what is, as opposed to what they ideally might want to be.  Oh and also I think that the last several years have been a process of winnowing the real hard ass gold bugs out of the base and leaving a group of well rounded market participants.  I like that.

This is not a ‘trash the precious metals’ post.  Changes are coming, but first you need to be intact, have several macro fundmental and technical indicators cross referenced and in line and be prepared to be brave when the sheep (funny how the most dogmatic “community” on earth calls regular people “sheeple”, isn’t it?) are being sheared.

* I am fully aware that there are standout exceptions, which is why I currently hold 3 junior gold stocks (alongside a short against NUGT).

All Greek to Me

By Biiwii

And it’s all Greek to the financial media as well.  MarketWatch‘s lead:

headline

US stocks were in need of a correction of some sort and on Friday at mid-day we had an NFTRH update showing the degrading state of US stocks (including the Dow rising hard to test a breakdown while leadership indexes signaled short-term bearish).  The Greek Debt Theater is a good accelerant, but that is all it is.

I’ll just ask you to remember that these inflammatory news events never but never have lasting impact.  They may be a trigger event, but they are not the reason for anything other than temporary emotional turmoil.  The media love that stuff because the media have to print something eye catching every day.

The US market is not bearish at this time*, but it was in need of getting bonked.  Well, bonk – either mini or maxi – in progress.

* Subject to change, as is everything in the macro markets.

Market Sentiment

By Biiwii

A snapshot of the latest data courtesy of Sentimentrader.com shows that Dumb Money had recently gotten the willies big time, while Smart Money firmed up.  Then a post-FOMC feel good fest unsurprisingly whipped up.  This has not yet brought the short-term sentiment indicators back to a contrarian bearish stance.

Short-term, Dumb Money got spooked and has been rebounding a bit with the markets, while Smart Money does the opposite.  This is not a bearish configuration.

smart.dumb.st

Long-term is a different story as Dumb Money has been trending higher with the markets throughout the post-2008 cycle.  So there is a supportive short-term condition for the market but an ongoing long-term bearish one.

smart.dumb.lt

Here is the aggregate of various sentiment indicators.  The red box shows what a really bearish setup looks like.  Still nowhere near that.

indicators

Sentiment indicators like all others, need to be considered as part of an overall view.  They are conditions, not directors.

MSM’s Greece Hysterics

By Biiwii

Ah of course, the plunge in gold and silver had to be due to something.

au.ag

Turns out the one subject I have been studiously ignoring above all others is revving up in the MSM this morning.

headline
MarketWatch

When you look at these events in a certain way, hilarity wells up within.  At least it does with me.  I mean, the predictability and sameness of it all is just funny.  On and on though the various cycles and events we are supposed to get all worked up about.  It’s just funny every time.