Tag Archives: market sentiment

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

 

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

No Fear, Yet

By Steve Saville

[biiwii comment: in the relative lack of greece-induced fear resides the potential for the summer correction to dig deeper, since a decent correction was due, greece or no greece]

In reaction to the ECB cutting off financial support to Greece’s banks and the resulting closure of all banks in Greece, the Global X Greece ETF (GREK) plunged 19% on Monday 29th June to a new bear-market low.

GREK_300615

However, apart from the assets most directly affected by the goings-on in Greece there are currently no real signs of fear in the financial markets. For example:

Continue reading No Fear, Yet

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.

The Emotion Pendulum

By Steve Saville

(This post is an excerpt from a recent TSI commentary.)

The stock market is not a machine that assigns prices based on a calm and objective assessment of value. In fact, when it comes to value the stock market is totally clueless.

This reality is contrary to the way that many analysts portray the market. They talk about the stock market as if it were an all-seeing, all-knowing oracle, but if that were true then dramatic price adjustments would never occur. That such price adjustments occur quite often reflects the reality that the stock market is a manic-depressive mob that spends a lot of its time being either far too optimistic or far too pessimistic.

The stock market can aptly be viewed as an emotion pendulum — the further it swings in one direction the closer it comes to swinging back in the other direction. Unfortunately, there are no rigid benchmarks and we can never be sure in real time that the pendulum has swung as far in one direction as it is going to go. There’s always the possibility that it will swing a bit further.

Also, the swings in the pendulum are greatly amplified by the actions of the central bank. Due to the central bank’s manipulation of the money supply and interest rates, valuations are able to go much higher during the up-swings than would otherwise be possible. Since the size of the bust is usually proportional to the size of the preceding boom, this sets the stage for larger down-swings than would otherwise be possible.

The following monthly chart of the Dow/Gold ratio (from Sharelynx.com) clearly shows the increasing magnitude of the swings since the 1913 birth of the US Federal Reserve.

Is Gold Hated Enough?

By Biiwii

goldAn article by Mark Hulbert jogged the title’s question into my mind:

This Bear Market in Gold Still Has too Many Bulls

With respect to the reasons for owning gold, I never flinch when taking a long-term value perspective.  In the monetary and financial world gold is insurance and insurance is something you buy, but hope to never need.  The value of insurance is in one of its definitions:  “a thing providing protection against a possible eventuality”.

It is good news that this ‘thing’ has not been needed as modern policy making has worked to mostly desired effects, as asset markets have been pumped by inflationary policies that have not (yet) had a commensurate level of risk discovery.

It is bad news that this ‘thing’ will be needed in the future because risk – especially when mainlined into the system through brute force policy – is always discovered, eventually.

It will be very good news for the relative few who have kept perspective and balanced the bear market risks in gold and the gold stock sector with the coming potentials.  As with any bear market, there have been perma bulls calling bullish all the way down.  But at some point, the new breed – the perma bears – are going to be exterminated.

The message of the big picture work done in NFTRH (as summarized in a recent eLetter/NFTRH.com post) is that the time is coming, but for short-term speculators, risks remain.  So as I have written for what seems like forever, individuals absolutely must understand who they are and what their goals are or risk being lost along the way to the bear market’s conclusion and the new bull market’s beginning.

When I read analysis talking about how strong US employment data are going to send large institutions running for the inflation protection of gold I tend to agree with Hulbert.  When I read things like Modi + Indian Wedding Season = Gold Bull I tend to agree with Hulbert.  When I read about China’s voracious demand for gold and that you’d better buy with the smart money, I tend to agree with Hulbert.

I won’t go into all the reasons why ‘gold as an inflation hedge’ is a faulty outlook.  This post is not about that oft-belabored point.  I will simply ask you to beware of the anti-USD obsession as applies to gold and the inflation hysterics that usually go with it.  Best case, gold would be just another item amongst commodities if the play is anti-USD.

We await a counter cyclical environment that may well include a firm US dollar.  This would not make sense to the still intact legions of pre-programmed devotees in the gold “community”.  And right there is another reason why on the short-term, Hulbert may be right.  Opportunity is coming, but it is not going to wear bells on its heels, a big smile on its face and dance around in front of you until it is understood.

Big Drop Imminent!

By Biiwii

See, the headline says so…

headline

Click the graphic for Mark Hulbert’s reasoning.

“The odds of a big drop in U.S. equities are high and increasing.”

Okay, but if this bull market has been one thing, it has been a rule breaker.  Hulbert cites waning participation as a bearish factor.  In the past we have noted record margin debt, record low cash, now stretched valuations (even by conventional analytical standards) and a cavalcade of other data that would imply a coming correction or bear market.

Every time it looks a little dicey, MarketWatch and friends trip over themselves to put up headlines like the above and this series of little mini-resets sustains the bull.  It’s a FrankenMarket for sure, and on this cycle the juice is coming from the MSM as every little blip is micro managed (although the sentiment trend on the big picture is that ‘dumb money’ data aggregates are climbing steadily higher) and market sentiment gets dinged just enough to keep the bear case at bay.

But the trend marches toward over bullish on the big picture and that will eventually end the bull or usher in a real – as opposed to blip style – correction.

Tilting at Golden Windmills

By Biiwii

dq.windmillsThere is a writer we’ll call Don Quixote who is tilting at something that no longer really exists… the evil gold promoters that used to be taken seriously by innocents to the tune of near total destruction of their portfolios.

Don once went on about the gold cult and I even highlighted his post because I had been going about the gold cult as well.  The cult-like aspect of the gold “community” (← a dead giveaway) was real, and the group-think that the 2001-2011 bull market fostered was very strong and really damaging to those who did not question its tenets until it was too late.

Continue reading Tilting at Golden Windmills