Warning… Condescension ensues… NFTRH 307’s opening segment, dated 9.7.14:
From a post on the HUI at the site last week:
“There are worse things that could happen than filling a gap and scattering the wrong kind of gold bugs back out. Then it would be up to the longer-term charts to do the heavy lifting if the daily does fulfill this downside potential.”
The gap was filled, the top end of the anticipated support zone was reached and indeed, the wrong [i.e. momentum players] kind of gold bugs are scattering back out. The hard sell down on Thursday was very likely due in large part to the selling by traders with a fetish about gold as a geopolitical or terror hedge.
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.
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.
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.
Guest Post by Elliott Wave International
A visual history of complacency and fear as seen by the 10-year spread over German Bunds
The one-two punch 2014 winter storms that battered the southeastern United States left $13.5 million in damages in Georgia alone and thousands of residents displaced due to burst pipes and power outages. I am one of the displaced. Three months after the flood, I’m still living out of suitcases in a hotel while my apartment gets rebuilt.
I’m ashamed to admit before Icepocalypse, I had the least comprehensive homeowner’s insurance. Why bother, I thought. This is Atlanta. The only blizzard this city’s seen in the
last decade is on the dessert menu at Dairy Queen.
But now, you better believe the first thing I’m going to do when I move back in is upgrade my policy to cover all and any acts of man and God — fire, tornado, sharknado, alien invasion, you name it.
It’s human nature. You can never truly prepare for the worst until you experience it first-hand. Then, and only then, do you go above and beyond to protect your health and welfare.
What better day than today’s predictable hard bounce to present the other side? If you believe the bounce and want to be a happy bull, just step along from this post. If you don’t mind considering other opinions or are like me in thinking 2014 stands a better than even chance of being the year that the current cycle ends, check out EWI’s 24 page report by clicking one of the graphics below.
We have come to a point in this cycle where we are supposed to feel ashamed for having bearish views or opinions. Prechter’s wrong again after all. The thing is, even a bull could use some alternate opinions. I am not talking about a market crash. Please. I am talking about a macro view. That should be someone’s basis for operation. I have my views and they have not changed since early last decade because the things I had negative views about have not only not changed, they have intensified and shifted (commercial credit replaced by official credit). But there is still a debit waiting out there.
We who hold a negative big picture macro view were stupid until the 2008 liquidation made us geniuses. Now we are stupid again and trend followers are smart. Wash, rinse, repeat. EWI is an affiliate and I make a commission on sign ups to their services. So consider this a promo. Also consider that EWI was founded by someone who was an influence of mine. So it’s not just a pitch. We’ve only recently gotten with the idea of partially funding all the free information here with ads, like most blogs have routinely done all along. Consider this an ad that I wholeheartedly recommend. And the darned thing is free for crying out loud.
Think about the year long topping process of up and down spikes on the HUI Gold Bugs index in 2011. Now think about things that may be working on replicas of that activity (hello US stocks) and things in the mirror that may be working on the inverse of it (hello grinding and dispiriting gold sector).
Now think about how long these processes take to play out and the patience involved. Also think about trading or defaulting to cash, because at times of change the volatility is something to behold (going both ways).
NFTRH 286 out now.
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.
Did you see Alex Lifeson at Rush’s induction into the Rock & Roll Hall of Fame? In accepting the award he offered the profound words “blah blah blah, blah blah, blah blah blah blah blah…”
Well NFTRH 283 blah blah blah, blah blah… and furthermore blah blah blah blah… and it is out now!
Below are a couple clips from NFTRH 9, dated November 22, 2008. I only show this because contrary to my current tone, I am not a perma bear. Really, truly. I am just a perhaps overly intense big picture risk vs. reward manager. ← And I’ll readily admit that can be worked on, fine tuned or whatever.
But in November of 2008 NFTRH had this to say about the Dow, given that everyone was convinced of deflation, depression and the end of the world as we knew it…
Later in the ‘Wrap Up’ segment this appeared (click to enlarge):
Nothing has really changed in the 5+ years since, other than the thing has been flipped over on its head. No one can control timing, mass emotion or any other market dynamics. If/as the market breaks upward I am going to have some fun. But for good measure it will pay to keep the idea of equals, opposites and things in the mirror in mind.
Risk vs. Reward S.U.C.K.S.
Hey, have a good and bullish weekend!
 Will ya look at the helium escaping from that thing?