Tag Archives: market sentiment

Man, That’s Cheesy…

By Biiwii

After the now-famous WSJ post, it seemed as if a bottom had just been called in gold…

Let’s Be Honest About Gold: It’s a Pet Rock

It seemed that the elements were in place for a contrarian rally if not bull market bottom.  Along with negative gold items routinely appearing in the financial media and a Commitment of Traders structure that had become very bullish, gold sentiment was bleak by indicators we track in NFTRH.

My how a 6% rally with an accompanying stock market down spike have changed things…

sinclair, gold sentiment still not ready
Click for the video @ YouTube

Here is the article associated with the video, sent to me yesterday…

Plunge Protection Team Losing Control of Markets -Jim Sinclair

I won’t even go into Sinclair and his ‘same old, same old’ spiel, trotted out the minute the stock market cracked.  Let’s just focus on one micro element of a case that implies gold bug sentiment is not yet where it needs to be for a real bullish stance.  From the article’s comments section…

Steve (website visitor):  “I used to believe in the rampant manipulation of the gold markets until i got proper information and grew up. If Gold is always manipulated to the downside, why buy it?”

Greg Hunter (website host):  “Steve you grew up to be an idiot. I got “proper information” from Dr Paul Craig Roberts* who laid out an analytical case for gold manipulation.”

It’s concerning if you are a gold bug, because the bear has apparently not dug deep enough into all the bunkers to devour the most ardent holdouts.

  • Above we have “Dr Paul Craig Roberts”.  From NFTRH 355 (very coincidentally I was reminded of this by a subscriber this morning):

Have you noticed that the bear and/or gold communities tend to make sure they call John Hussman “Doctor Hussman”, Jim Willie “Doctor Willie”, Robert McHugh “Doctor McHugh”, Chris Martenson “Doctor Martenson” and any other Ph.D. writing about markets “Doctor”, while conveniently forgetting to label the likes of “Doctor Bernanke” as such (“Helicopter Ben”)?

I don’t know about you, but when I am reading articles and I see a writer labeling someone with whom he or she agrees (and with whom they want you to agree) “Doctor” in order to convince the reader of the material’s seriousness or worthiness I think “man, that’s cheesy”.

S&P Enters Correction!

By Biiwii

Hey guys, the S&P entered a correction the moment it broke down from the nose of the Diamond and the pinch between the MA’s 50 and 200.  But here’s Reuters by way of Fidelity to clue us in that S&P entered a correction today.

Wall Street tumbles again as S&P enters correction (complete with classic stock photo of stressed out trader).

trader
Sad trader from Reuters/Fidelity

“NEW YORK (Reuters) – U.S. stocks ended more than 3 percent lower on Monday, their fifth straight drop, in an unusually volatile session that confirmed the S&P 500 was formally in a correction.”

I don’t know about you guys, but I’ll take the informal kind of correction and prepare accordingly.  It started when SPX dropped out of the red dot for the 2nd time and was confirmed when 2050, a whopping 157 points ago, was lost.

Here is what actually happened.  SPX chose ‘down’ from its moving average decision point.  This had been the most likely direction given momentum, leadership and participation that had been fading long before hand, although it also seemed pretty obvious.  I mean, you and I both saw it, right?  SPX then broke support #1, turning into resistance #2.  SPX then broke support #2, turning into resistance #1.

s&p 500

And now here we are.  The bull market is intact and the test is at hand.  What the market has going for it is Mr. Frumpy Trader up there, and a lot of bear market calls coming out.

So everybody’s got the bear memo, the Margin man has probably made a good amount of his collections and nothing is resolved.  Not unless the market loses the October lows.

NFTRH 357 Out Now

By Biiwii

#357 is about road maps for the US stock market.  There is one road map for the immediate-term, one for the next 1-2 months and then another, which will be the decider between a new, manic and bullish stock blow off phase or a brand spanking new little baby bear.

Regardless of what the big answer is in the fall, the next 1-2 months is going to be very trade-able, in both directions.  Parameters are clear.

As for the precious metals, they are a work in progress.  For now, the US stock market is a better trading vehicle, technically.  I’d advise people to tune out anyone who would try to use last week’s events to scare people into gold.  Gold will get where it is going in its due time, and it does not need pompoms and cheering squads to help it.

nftrh 357

Bond Safety?

By Biiwii

[edit]  Upon re-reading, it’s another of those posts I sometimes receive critiques about.  Few conclusions and no clear direction.  Maybe that is just the point though.

@ Fidelity…

Equity outflows at 15-week high as investors seek bond safety

And there they go, conventional lemmings jumping from the frying pan, into the fire, soon to realize the fire is way too hot, and heading for that cliff over there.

(B)ut (i)t i(s) (w)hat (i)t (i)s and (N)otes (F)rom (T)he (R)abbit (H)ole are so named because we are all about anti-convention, as global markets have not been comfortably conventional since the late 1990’s, I think.  This most recent cycle has existed to put all of us malcontents, cranks and alarmists back in a box under the bed, if not into the dustbin of history.

Well today, conventional sheep are flocking to conventional positions.  “Bond safety” is what they run to when they are afraid of stocks.  Of course, with gold now showing strength, the promoters over there are retooling their former “China/India demand” and “employment growth will spur inflation, which will drive people to gold” pitches to something more appropriate for the times, when global economic contraction comes to the fore and deflation is front page news.

Imagine that, investors flocking to bonds while DEFLATION! is all up in the headlines.  Reminds me of Q4 2008, just before the next INFLATION.

This market is now officially fun again after the post-October drudgery that last month forced me to admit that my trading sucks and that I needed to take a time out and sit on my hands (as the market’s swings became too frequent and too contracted).

Do you see?  Investors are seeking safety in bonds.  Media are managing a global stock crash.  Bull trend followers’ heads are spinning (‘Am I still a brave, resolute, trend following stock bull?  Should I keep posting as such or is my inner fear barometer stronger than my resolve?’) and oh yes, the precious metals are bouncing while commodities continue to tank.

There are only a few entities who have called this environment.  One is an influence of mine, Bob Hoye (decisively, but on what some might find an inconveniently long time frame).  Another is NFTRH (less decisively, but on a very tight time frame).  This is a market that is going to put all the carnival barkers (including gold touts) in their rightful places because now changes are happening and it will not be so simple as ‘stocks are tanking, buy bonds!’ and obviously, the whole ‘economy brings inflation, buy gold!’ promo.

Tops are spinning on the table and it all makes perfect sense.  And I am not even a stock market bear.  I just do not buy or hold tops.  I look forward to a real bull market in the gold sector, but there is yet work to do folks.  The US market’s big trend is still up and gold’s is still down.  Not saying change is not in the offing, just saying trends have not yet changed.

With respect to gold, this summer’s event is so much more in line with fundamentals that matter than last summer’s Ukraine→Russia→Ebola pitch that was nothing more than promotion.  But there remain some rocks beneath the surface.

As to the article linked above, this certainly does put Martin Armstrong front and center, with his ‘final flight to the safety of the government bond bubble’ analysis…

LONDON (Reuters) – Equity outflows hit a 15-week high of $8.3 billion in the past week, with fears of a China-driven global economic crisis pushing investors towards safe-haven money-market funds and Treasuries, Bank of America Merrill Lynch said on Friday.

I have not really known what to make of Marty and his computer, but this is 100% in line with his forecast.

I just love a market where things are in motion.  Robo market was a dead thing, momentum waning and hopes fading.  Now resolution is to the downside.  From this point, it is now time to throw out the easy analysis and be prepared for the counter-cyclical environment we have expected upon completion of the post-2008 economic recovery (and all that paper and all those digits behind it).

Now you do not get points for just showing up and following the trend.  Now you find out if that which you hold true actually is.

Market Sentiment Getting Too Bearish

By Biiwii

Well, bearish sentiment is getting stoked up but good.  There will be a bounce or rally at some point.  This summer’s bearish media and investor sentiment have tipped toward out of whack with the US market’s price action.  Foremost in this regard was Sentimentrader‘s AIM model, which we reviewed as over bearish last weekend in NFTRH 356.

When prices stop declining and the rally comes from whatever bottom is ahead it could be a strong one, much like how the precious metals have bounced hard out of a hugely over bearish sentiment backdrop, as anticipated and expected.

I have already added a couple bull items against two US market short positions (added a short on a leveraged NDX bull fund to an existing SPY short).  These are items I bought for my own reasons and that I think have good potential should the market not fall apart.  If it appears we are going to get the type of sentiment wash out that happened in October a good post-summer, post-September trade could shape up.

NFTRH 356 noted the Housing sector before this week’s hype got the trend followers all over it, blowing a would-be entry point.  There is a pullback ‘buy’ target, which I now am not so sure will be hit.  But if yields go a certain way* in this deflationary swoosh, it could be a ‘buy’ if it pulls back enough.  There should be plenty of other items coming on sale as well.

For now though, just as price ruled in favor of the bull case despite waning momentum all these months, price rules for the bear case despite improving sentiment profiles.

*  Once again in the interest of full disclosure, just yesterday I speculated about a rise in long-term interest rates in an NFTRH update.  Ehhh… wrong, at least for now.  At some point the ‘inflation trade’ is going to bounce big.

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.