Category Archives: Sentiment-Psychology

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.

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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Casino

[edit] 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.

spx

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.

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The Society of the Spectacle*

spectacleI 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.”