SENTIMENT AT EXTREMES

The 20 day moving average for sentiment in GLD is now at levels that have only occurred twice in the last 11 years. Once very near the bottom in 2008, and also at the D-wave bottom in 2006.

When sentiment gets this bearish the odds favor a contrarian trade.

The direction for gold in the very short term may be hard to predict, but the direction over the next 2-3 months should be very easy to predict.

History says gold will be much higher 2-3 months from now.

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79 thoughts on “SENTIMENT AT EXTREMES

  1. stockpick

    Gary,
    After being down for the last 2-3 months we should expect a bounce…….but it has not happened yet!

    You keep bringing various indicators from time to time….but they have proved to be unreliable!

    One of these days you may prove to be corret….but it is because you have been wrong for so wrong!

    1. Gary Post author

      Heck all I have to do is be correct once and catch the rally out of the ICL to make big bucks. The rally out of last years low gained 1000% in NUGT.

      We stopped out into the bounce in Oct. Now I’m trying to pick the bottom. If I just get close we should be able to do 100-300% in one of the leveraged funds.

      We bought on golds reversal yesterday. Our stop is very close at 1152. If we get stopped out we won’t lose much and we’ll try again on the next setup.

    2. GMoney

      The way I look at it is given the terrible sentiment, rising SM, rising interest rates and weakening Yen, it is a miracle Gold has not gone sub $1000.

    1. vin

      come on Dday! You don’t have to follow all indicators.

      btw I am a great fan of 50/200 mda. I find it more reliable than other indicators, particularly the crosses (both ways).

  2. ras

    One indicator is a slender thread. Let us wait for other indicators and leading stocks to chime in. We will know when it happens. No need for anxiety unless one happens to be on the wrong side of price. Pms will have their day in the sun when the market clock says so. The immediate trend is down, bounces notwithstanding.

  3. ras

    Amazing rotation among Dow 30. When one stock falters, others are stepping in and pushing the average higher. This could go on for a while, who knows? All that one can say is : at some point there will be a profit taking event. To get a good grip on the pulse of SM, it helps to monitor continuously the technical condition of the 30 stocks individually.

  4. jonsyl

    oil continues yesterday’s sluggish performance in spite of happy talk from trump cronies, vix continues to run divergent to equity lift and worth watching. gold doing the expected churn while leverage etfs like nugt hold up above nov 12th lows in spite of time decay. All in all, nothing to do but watch as this churn is not a guarantee of anything. Patience patience

  5. Don

    Dennis Gartman went bullish on crude and within minutes, a sell off in oil stocks began. That man is amazing with his ability to be a close to being wrong with 99% of his calls. I wish he would get bearish on gold. For now we have to rely on Gary who is not wrong anywhere close to Gartman’s track record.

  6. jonsyl

    rotation in equities to biotech/pharma and tech underperformers could power equity averages further than people expect after any short term profit taking of a few days

  7. jonsyl

    my 1150 downside limit getting uncomfortably close. otherwise another dead day for both bulls and bears.

  8. Alexandru Popovici

    Both RUSSELL2000 & Transports close to confirming their daily cycle declines while Staples head for piercing their 200dma and Utilities are close to confirming their new Intermediary Cycle.
    Stock bulls are bulls at their close expense.

      1. ras

        very true. fas,iyt, tna showing short term weakness. That is not enough. We need to see clear change in trend on intraday/daily charts before thinking about SS.

  9. Alexandru Popovici

    ZKOT, I am not interested in gold anymore.
    I am convinced it will bounce forcefully towards $1300 as The SCORCH flames up post-FOMC announcement tomorrow but I would rather short stocks than buy gold/miners or treasuries from a risk perspective.

    1. michelle

      Alexndru has been calling SM scorch for weeks now as the market has gone crazy higher. You are full of hot air and nothing more.

  10. crawfordnews

    Gold has an expanding wedge … and the trend is down. Does not look good for Gold. Any rallies can be sold or shorted. Gold is looking sick.

  11. BeKind

    Hey Alex aka Dr. Scorch. I love your independent views. Keep them coming…but make sure your children are getting lots of love and attention. First things first. The markets and irrational thinking will always be with us. Best of everything to you and your family.

  12. Spanky

    The full stochastics on the daily yen ($xjy) chart have been oversold for 6+ weeks. That is insane. And GLd has matched it almost exactly. While the yen has had similar stretches between 2012-2013, GLd has never ever done anything so extreme. I defy anyone to find such a period for gold within the last 30 years.

    Sorry, but this is totally unnatural market action. It makes sense in currencies because you literally have infinite supply. But GLd??? It’s a complete farce. Not even campanies that go bankrupt stay at such extreme levels for so long, so for gold to do it it just shows how jacked up and dishonest/distorted the market can get (at least in the short run).

    Last December I thought we saw some things technically in the metals that were statistically extremely improbable, but to me this price action even beats last December. It’s a totally manipulated market, for now, at least of short periods. The action is simply too unnatural to be genuine, IMO.

    1. jeffd5584

      Comment boards are great for gauging sentiment extremes. Several months ago, Gary could post without 80% negative comments coming at him. Now Alex is feeling the same level of vitriol. The hardest thing in the world to do is “fade” the euphoria. One clue of a potential major top is that the Russell/MidCap index is finally coming off of the parabolic swing high. It’s basically a game of three card monte. These guys jack up the Nasdaq while the leadership indicies start to head lower. Plus, any of you cycle guys will take note of the time window we are in this week.

      (Anybody else notice the time and price symmetry of GS just the other day?)

  13. Alexandru Popovici

    Thank you, Bekind!
    Watch out: I am bullish on stocks from mid next week through New Year’s Eve as well as bullish for after The Scorch.
    So my plan is:
    – to add my short to a full position when SPX returns to 2253
    – cover it early next week,
    – resume my short around New Year’s Eve as SM produces higher highs,
    – get long stocks sometime in JAN.

    My best regards to you too, BeKind!

    1. jonsyl

      alex, judging by your last post, sounds like you”re prepared to continue to miss more equity upside till new year’s eve (after some minor pullback post fed tomorrow), the real scorch will then begin in earnest. What is the anticipated magnitude of this scorch.

  14. vin

    Come on guys, gold is bull now. If one does not buy now one will sorry two months from now for missing this opportunity.

    And, this has been said over and over again. If one does not understand such a simple thing, one should not be investing. Btw, gold is bull. Even if one enters at a wrong point it does not matter because the bull will correct all mistakes.

    If one has doubts, one can consult experts on this forum.

    1. jeffd5584

      I’m happy that my case of metals “deja vu” kicked in pretty early during this rout into another cycle low. Once the middle of the night “slam down’s” become a common theme, I’ve got no desire to stick around thru that pain. Gary noted that the slam down’s were conspicuously absent from around January thru August, and I agreed with that observation. Many others who are familiar with them noticed the same thing. It just seemed a little bit too “perfect”.

      Now I’m seeing the emotional “Global Weimar” posts appearing again. Gold tanking, dollar spiking, stocks doing their usual thing…Seriously, in 2007 or 08 when gold was in a parabola higher with stocks (and crude oil), the “Global Weimar” had some more teeth to it…

  15. michelle

    Alexandru has been wrong on everything so far so keep listening to what he plans to do next. He is clueless and simply guessing.

    1. Markab

      Agreed, it has been almost like a reincarnation of Dennis Gartman. Do exactly the opposite of what he says and you’ll make $$.

    2. jeffd5584

      A bunch of nasty little troll’s seem to have found this site. I think that one stupid comment from you was enough, but now you have to repeat your idiocy ad nauseum. Gary should throw you and the rest of the lot into the trash bin.

  16. Goild

    Today appears to be a bad day for gold.
    What is interesting is NUGT reluctance to follow gold.
    Usually sometimes before the FOMC meetings things are run up down as anticipating the news,
    or setting a trap. We shall see tomorrow.
    I am green today. Good trading to all.

  17. Spanky

    For gold, this is all about the yen. Has been and will continue to be the driver for metals and the stock market. If someone is bullish gold in usd terms they are per bullish on yen in usd terms. So if you are bullish on gold in usd terms, please articulate a bullish thesis for yen in usd terms. I am all ears.

  18. bginvestor

    I’m in JNUG at 6.40 ; HUI still riding support nicely… You can tell by the price action its waiting for tomorrow’s result.. I think miner’s relative strength against GLD is a positive sign for this trade..

    Also, started to scale into GDX for long term trade.

    Its pretty simple, its going to push up from here OR break down this strong support. Its consolidated for fucking four weeks, so the patient traders just may be rewarded. Good luck, I know I’ll need it.

  19. Goild

    So bginvestor and Gary are already in.
    If gold were to go up after tomorrow then I would expect a good trap tomorrow morning.

    1. Spanky

      do not take your cues from option activity.

      This is simply a repeat of 1997 except this time I don’t expect the stock market to stop. I fully anticipate the CBs to manage a 3-5% consolidation at some point, and when things get extremely heated it will be closer to 10% in the broader indexes. I don’t think we see a 10% correction until the Dow hits 30,000+, though. This is the ultimate moral hazard created by the world CBs. You have absolutely nothing to lose. Just dollar cost average into gold using your profits from the stock market.

      1. bginvestor

        You mean, take profits from a sector that is peaking and move it to a sector that is lagging..

        Oh, I never thought of that… 😉

        1. Spanky

          Who said the stock market is peaking? I don’t think it will ever peak in nominal USD terms. It is headed for infinity. The only thing that can stop the runaway train is dissolution of Bretton Woods II.

          The trick will be to determine when it peaks in real terms (i.e., against gold or commodities).

  20. Goild

    If the miners break resistance, then the probabilities would indicate going down to the next level down, and sentiment will be worst. So it will take a while to reverse.

  21. Strike

    Let me count the ways:
    ….Janet will be gentle. She doesn’t want a market overreaction.
    ….Weekly stochastics set up for at least a multi week rise.
    ….My favorite indicator – sentiment – says there are few left to sell.
    ….Divergence between the metal and stocks is a mirror image of a year ago prior to blast off. I think its ok that stocks are leading this time – they often do.
    ….Does silver ever outperform in a bear market? No!

    1. Spanky

      Those positive divergences can be wiped out in one day.

      Do you think gold always outperformed miners between 2012-2015??? Of course not. Nothing goes down in a straight line, including the gdx:gld ratio.

  22. Robert

    It looks like gold could get one more flush down to 1120-1140 tomorrow. I think that will be the final bottom for gold then get a good sized bounce. It cant just keep going down. Extremely oversold

  23. butch

    As of latest COT report commercial longs are 86k long compared to 149k longs on December 11,2015.
    That is ARLARMING. This could go down to 800 in the next few years.

  24. Goild

    The manipulators are likely to let it drag a bit more at least. Fear makes wonderful things too.
    The miners may be sitting in air and only held by the SM. Let the interest rate make the SM reverse and
    the miners might follow gold with a sudden big red candle. We have a risky situation here.

    1. TraderPete

      Ignore the news, and stick to your plan; because too many cooks spoil the broth. In other words, do your own research and due diligence. Have faith in yourself.

  25. Spanky

    Short of Yellen not raising rates tomorrow, there is absolutely no chance that the low for gold will come on the week of the FOMC or the week after. We already saw that play out last year. do you really think they will produce the exact same set up?

    Even if we do rally starting tomorrow, gold will come back in a few weeks and make a lower low.

    The more likely scenario is we get some volatile action this week, perhaps with gold up $20, and then it gets slammed in the next two weeks into a near term low.

  26. Goild

    Yes, it is unlikely that we will have the same scenario, the marker is very different this time.
    It might be that tomorrow, except for a big swing spike at 2:00 PM things would be as usual.
    After all, interest rates should change if at all little, the FED is running a smooth show, and probably would not interfere much with what Trump is bringing.

    1. Spanky

      It’s possible that $gold gets thumped big staring this week too. Most technicians are saying it can’t go much lower given how oversold gold is.

      It would be too easy to go long this week anticipating that this plays out like last December. I expect the stock market to keep going up or sideways at worst, simply because so many people are saying its overbought–sort of like what people were saying about miners being overbought in February. The stock market will eventually start to make divergences with the momentum indicators and then we will see a 3-5% correction, but from much higher levels. I have said I don’t expect a 3-5% correction until Dow 21,0000, but the more I think about, it will probably be a couple of thousand points higher than that before a measly 3-5% correction.

      1. Gary Post author

        Actually dumb money (retail traders) sentiment is at almost 80% bulls. That’s one of the highest levels in the last couple of decades. Almost invariably when sentiment gets this extreme the stock market corrects.

        Again it’s not a short term timing tool, but does suggest any further gins will probably be given back at some point soon.

        Maybe the Dow drops back to test the breakout.

  27. BeKind

    2 words: currency debasement. Gold is going to the moon along with every other tangible thing of value. End of story.

  28. shiva1968

    Likely we are not in a new bull market for Gold, just a big bounce earlier this year followed by what now appears to be renewed decline taking it to new multi years lows. We could see a small rally here and the relative strength of miners is because many people are stubborn and are convinced we are in a new bull. Bottom not in. Any short term bounce will likely be a better opportunity to add to or start a new short position.

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