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Tagged: Sentiment RSS

• Pete 1:57 PM on January 5, 2011 Permalink
  Tags: GLD ( 27 ), observations ( 42 ), Sentiment   

  Gold Sentiment Articles 

  Some articles that caught my attention.

  Bespoke reporting:

  Gold Breaks 50-Day Moving Average
  For the first time in 100 trading days, the price of gold (using the front month futures contract) dropped below its 50-day moving average. This ends the third longest streak of trading above its 50-day that the commodity has had since 2000.
  

  Since we are having talk about the 50-Day Moving Average we must then bring out the Investor Sentiment Cycle phases.

  Gold going through which phase?

  BUY THE BIG DIP
  The public continues to pour money in, lured by glowing good news and economic data. After the long move up, finding attractive stocks becomes difficult for technical traders and market veterans. Traders chase momentum where they find it. Investors believe that the game is back on, and they are willing to take big risk and buy big dips. This Big Dip usually comes after a failed test of top in the Returning Confidence phase. The Big Dip typically takes price below the 50-day simple moving average and quite often, to the 200-day moving average. This is where ABC Corrections are typically found.

  ———–

  DISBELIEF
  The market fails to go higher, and indeed many of the early leaders have broken down under the 50-day moving average, giving technicians the Subtle Warning. This marks the beginning of the ‘something is not right’ gut feeling, but in the absence of bad news, investors hold on to hope. Not only are they heavily invested in the market, they are psychologically invested in being right and they ignore anything that does not go with their worldview.

  If you believe that gold is going through the Disbelief phase then one would find it interesting that Jim Cramer pounding the table that he is right on gold and Doug Kass is wrong.

  One of Kass 2011 surprise’s “The price of gold plummets by more than $250 an ounce in a four-week period in 2011 and is among the worst asset classes of the new year.”

  Cramer: Kass Gold Call Wrong

  Mark Hulbert of Marketwatch.com came out with a ‘why’ article.
  Gold’s mysterious drop; Commentary: No obvious catalyst for gold’s big Tuesday drop
  

  Sometimes, a security’s price will drop for no reason at all — it just happens. It’s beginning to look as though that is what’s the case for gold, which has dropped nearly 3% so far on Tuesday. That’s because the usual suspects have good alibis.

  Another Marketwatch article
  Gold suffers steepest single-day slide since July

  For gold, which advanced 30% in 2010, it was the first “meaningful” selloff in several weeks, said Charles Nedoss, a senior market strategist with Olympus Futures in Chicago.

  “We’re seeing [investors] shaking the money tree,” he said. Large-fund liquidation, based on technicals rather than fundamentals, was the story, he added. “The longer-term [upward] trend for gold is still intact. This is just a blip.”

  Asset rebalancing may also have played a role in Tuesday’s selloff as funds “fine tune” their weightings during the first half of January, Kitco Metals analyst Jon Nadler wrote in a note to clients.

  Large fund liquidation? Hmmm who was bullish on gold in 2010?

  FT.com reporting that The Paulson & Co Gold Fund run by John Paulson was up 35% in 2010.

  The Paulson & Co Gold Fund, which invests in mining stocks, derivatives and physical gold, is up about 35 per cent.

  About a third of all investments in Mr Paulson’s other main funds are also denominated in special gold share classes, which track the performance of the gold market as well as the performance of the underlying funds.

  Mr Paulson’s significant personal investments in his funds are almost exclusively denominated in the gold share classes.

  Will he be turning his gold paper profits into real cash profits for himself and investors?

  Technicians already asking according to Marketwatch.com
  Will gold hold?

  SPDR Gold Shares (GLD) is down for the third straight day Wednesday morning to trade below its 50-day moving average, which has acted as a floor several times since GLD climbed above this indicator in August.

  Ditto for iShares Comex Gold Trust (IAU), which has seen money move in the door since cutting its expense ratio.

  A failure to hold at the 50-day moving average could be a sign of a deeper correction in gold and other rallying precious metals. Still, gold has been very resilient in its march higher since the beginning of 2009.

  The newsletter of the year for 2010 was awarded to The Aden Forecast which happens to be for mostly gold bugs :)
  Letter of the year

  Also worth noting Carlos Slim the worlds richest man is looking to enter the silver market in a big way.

  FT Alphaville reporting:
  Does Carlos Slim really heart silver?

  A source in mergers and acquisitions out of Europe has alerted King World News that Carlos Slim may be looking to enter the silver market in a big way. Gold and silver are in big bull markets and this is attracting the attention of some of the smartest money around the globe.

  The European source commented, “This deal has been floating around for a while, but I think this time it is going to happen. It’s in his backyard. This is the world’s richest man wanting to get into silver.”

  Brad, and Pete are discussing. Toggle Comments

   

  • Brad 6:43 PM on January 5, 2011 Permalink | Log in to Reply

    Wow- great job with all of that, Pete. That’s a lot to chew on.
    I feel like Kass is right, and it will “only” be a $250 slide- not enough to shake me or my clients out.
    But I am also feeling sure that you both will be proven right on this in the not-too-distant future.
    I wish us all luck!

    • Pete 8:12 PM on January 5, 2011 Permalink | Log in to Reply

      Hey Brad these are just articles people should pay attention to for sentiment reasons. Interesting on CNBC doing the big “Hot Commodities” segment even having Bertha Combs reporting at a goldmine with $1mill worth of gold in front of her. What is next reality shows following gold diggers? Oh wait ;) How many real estate flipping shows were created during the housing boom? lol

      • Brad 10:44 PM on January 6, 2011 Permalink | Log in to Reply

        I have to admit- I know I am supposed to watch CNBC for sentiment checks. And I really want to. But I find it too painful. One of the reasons I love LOVE LOVE T’s site so much is that you guys apparently have the stomach to watch it for me.. THANK YOU. Unghh. SO painful. Bertha Combs. What can I say? I just can’t watch any of them. Thanks-

• Pete 11:22 AM on January 4, 2011 Permalink
  Tags: IWM, Sentiment   

  Russell 2000 Doubling S&P 500 as Economy Drives Rally 

  Bloomberg.com reporting:

  Smaller U.S. companies are rallying the most since 2003 relative to the Standard & Poor’s 500 Index, a sign to BlackRock Inc. and JPMorgan Funds that the economy will strengthen and spur a third year of gains for investors.

  The Russell 2000 Index, comprised of stocks with a median market value of $528.5 million, rose 25 percent in 2010, beating the S&P 500 by 13 percentage points. The return left the benchmark gauge for American equity at the lowest valuation ever compared with the small-cap measure, according to data compiled by Bloomberg.

  Perhaps this is why the AAII investors are bullish on small caps. Also the article included many quotes of bullish sentiment.

  “It’s good news that small companies are doing well,” said Rendino, a money manager at the New York-based firm that oversees $3.45 trillion. “If small companies are doing well, it tells you that the U.S. economy is getting healthier, and that bodes well for the market.”

  —————–

  “The message that the small-cap rally has been giving is that the economy is recovering,” said David Kelly, who helps oversee $445 billion as chief market strategist for JPMorgan Funds in New York. “Large caps look cheaper than small caps, and people, if they are long-term investors, should be a little overweight large caps.”

  —————-

  Large companies tend to lag behind smaller ones in the first two years of bull markets and beat them during the following 12 months, according to data compiled by Sam Stovall, chief investment strategist at S&P. Since 1949, the S&P 500 had an average gain of 5 percent in the third year of equity rallies, more than double the advance of small companies, he wrote in a Dec. 6 report. The S&P 500 has surged 86 percent since the bull market began in March 2009, while the Russell 2000 has risen 128 percent.

  —————-

  “The economy seems to be recovering nicely again, and the soft patch is over,” said Barton Biggs, managing partner of New York-based Traxis Partners LP, which oversees $1.4 billion. “I’m betting the next move in the S&P 500 is up, not down.”

  When Barton Biggs speaks investors listen ;)

  Also Mark Hulbert helping the small caps bulls with this January Effect article.

  Small-cap special: January is the month when small caps shine

   

• Pete 11:07 AM on January 4, 2011 Permalink
  Tags: Sentiment, SPY ( 28 ), TLT ( 10 )   

  AAII Asset Allocation Survey: Bond Holdings at a 10-Month Low 

  Barry Ritholtz reporting:

  Individual investors kept their portfolio allocations to equities essentially unchanged last month, according to the latest AAII Asset Allocation Survey. Stock and stock mutual fund allocations were 62.2% in December. The historical average is 60%.

  Bond allocations fell for a third consecutive month. Individual investors held 20% of their portfolios in bonds and bond funds in December, a 1.8 percentage-point decline from November. This is the smallest allocation to fixed income since February 2010. The historical average is 15%.

  Who needs stinking bonds? Sure that is good sentiment to be watching, but this actually caught
  my attention.

  This month’s special question asked AAII members which asset class will perform best in 2011: large-cap stocks, small-cap stocks, international stocks, Treasuries, corporate bonds or precious metals. Respondents said that large-cap and small-cap stocks should deliver the highest total returns, with both asset classes receiving similar numbers of votes. International stocks were also picked by many investors. Bonds, both corporate and Treasuries, received very few votes.

  Now we can see where individual investors are pouring into.

   

• Pete 11:30 AM on December 30, 2010 Permalink
  Tags: Sentiment   

  Equity Funds See First Weekly Inflow Since April 

  Bloomberg.com reporting:

  Flows turned positive in the week ended Dec. 21, when investors added $335 million to American equity funds, the Washington-based firm said in a report yesterday. They sent $3.6 billion to U.S.-based funds that invest overseas. Before last week, about $90 billion was pulled from U.S. equity mutual funds since the start of May, when a 20-minute plunge briefly erased $862 billion from the value of U.S. stocks.

  Americans are coming back to stocks after the Federal Reserved signaled it would support the economy by buying more bonds and third-quarter earnings reports showed results that beat estimates. The Standard & Poor’s 500 Index has gained 23 percent since July 2, including a 6.7 percent advance since Nov. 30, the biggest December rally since 1991.

  Ammo for the bulls.

  Lyle is discussing. Toggle Comments

   

  • Lyle 4:29 PM on December 30, 2010 Permalink | Log in to Reply

    As we have been told “tops happen when not expected.” The bears have been pulling out of their short positions and the public are now moving into stocks through the funds. Seems like the market is set to move higher. But, that is when the tops happen.

    I am waiting for the new USA congress and the mess in Europe to come together to scare money movement into high gear.

• Pete 3:49 PM on December 22, 2010 Permalink
  Tags: Sentiment, TLT ( 10 )   

  Bond Investors Take $8.62 Billion Out of Funds in Week 

  Bloomberg.com reporting:

  Bond mutual funds had the biggest client withdrawals in more than two years last week as a flight from fixed-income investments accelerated.

  U.S. bond funds experienced withdrawals of $8.62 billion in the week ended Dec. 15, up from $1.66 billion the week before, according to a release from the Investment Company Institute, a Washington-based trade group. Last week’s withdrawals were the largest since the week ended Oct. 15, 2008, when investors yanked $17.6 billion from bond funds.

  Removals included $3.77 billion from taxable bond funds and $4.85 billion from municipal bond funds. U.S. stock funds had withdrawals of $2.4 billion while foreign equity funds attracted $2.24 billion in the week, ICI said.

  Investors are retreating from bond funds after signs of an economic recovery and a stock market rally increased speculation that interest rates may rise. The selloff in Treasuries accelerated after the Federal Reserve last month pledged to buy $600 billion in assets to revive the economy. The 10-year note yields 3.35 percent, up from 2.49 percent Nov. 4, according to data compiled by Bloomberg.

  So now investors are in “Flight Out of Safety” mode.

   

• Pete 7:44 PM on December 21, 2010 Permalink
  Tags: GLD ( 27 ), Sentiment   

  Keep an eye on gold, bonds in 2011 

  Bill Fleckenstein reporting:

  First, on Dec. 13, Dennis Gartman shared some gold data that I think tells an important story.

  Back in the early days of the gold bull market, I remember arguing with people that, in my view, gold prices would be driven by demand for the metal as an investment, not by interest in using it for jewelry.

  That was a novel thought in those days, as “analysts” used to focus only on what jewelry buyers were likely to do. In those days, that was deemed to be all one really needed to know about gold.

  In the wake of the tech-stock bubble bursting, I knew that, once it became clear the Federal Reserve was going to try to print money as a way out of that mess, the dollar would have problems and gold would be a beneficiary.

  Of course, as the real-estate bubble inflated, leading to an even larger disaster, there was no question that even more money-printing would follow. This bolstered the case for gold. Thus, my argument was always based on investors being the drivers of the gold bull market.

  From baubles . . .
  That, in fact, has been the case. But I was still surprised to see just how potent investment demand has become. According to Gartman (the data likely originated with the World Gold Council), in 2000, investment demand accounted for approximately 2% of demand for gold, while about 80% of demand came from the market for gold jewelry.

  By 2005, the jewelry share had declined to about 60%, while investment demand had risen to about 20%. Nowadays, jewelry usage is about 40% and investment demand is just over 40%. (Gold also has industrial and other uses, which accounts for the remainder of demand.)

  As Gartman notes, “The ETFs are having their very real impact.”

  So gold market is even steven between jewelry usage and investment demand. This can’t be something worth watching is it? ;)

  In case anyone missed this fascinating article from Bloomberg article about the creation of the Gold ETF.
  Soros Gold Bubble at $1,384 as Miners Push Buttons