35 thoughts on “CHART OF THE DAY – TRADERS ARE TOO BEARISH

  1. macman1519

    Political risk, political risk! As long as trump keeps trying to have a pissing contest with N Kore, gold goes up, SMs decline. Trump keeps threatening NK. So untill this blows over, ur charts will have to wait. Trump finally found a way to be popular and presidential. Hes become a gunslinger, too bad for the world. Can anyone here war drums. Will N K sit back and take trumps belicose bullying or will they do a preemptive strike, like shelling a S Korean ship? Who knows with two looney tunes threatening each other. Therefore gold continues to rise.

  2. cazabrujas

    I was about to say the same thing as Mac. You can’t just bury your head in the ground and forget what is going on. Sentiment, charts and cycles do not matter until we have some kind of resolution on NK and Syria. There is also the matter of Trump’s possible impeachment if investigators find some kind of collusion with Russia and the deteriorating economic situation (which the fed fails to acknowledge while raising rates). So, making predictions for next week (I.e. Gold is topping early next week) is just guessing.

    1. Gary Post author

      Making predictions the gold won’t top is just a guess as well. 🙂

      I’m using the tools that have worked for me in the past to anticipate what is going to happen and how to trade it.

      You are hoping news will drive the markets. It rarely does for long.

      1. ras

        Closing value 0.96. In November last year, it was 0.99. The short trade is too crowded. Prior to that another peak occurred at 1.01. Values in the range 0.95-1.01 do not occur everyday. When they do, the only conclusion one can draw is that the short side is getting overcrowded and the market is getting close to a turn.

        With respect to top in gold. I am more interested in movement of gdxj relative to gold. On intra day charts, gdxj is beginning to enter into down trending mode. So are seniors like nem. This is not a great sign for strong rise in pm stocks.

        Last point. The impact of news on price is at beast transient. In 1980’s, when news of iran hostages not being released came out, gold price used to make a bit of a bounce to be followed by decline to new lows when rumours of imminent release of hostages surfaced.

        1. cazabrujas

          Looking at GDXJ right now is. It a good idea, as it is going through some serious rebalancing. Better compare the relationship between gold and the HUI or GDX

        2. cazabrujas

          Looking at GDXJ right now is not a good idea, as it is going through some serious rebalancing. Better compare the relationship between gold and the HUI or GDX

  3. cazabrujas

    Fair enough, I am also making a guess based on a very likely event that could not happen at all. Perhaps it would be helpful to illustrate your view if you could show us how markets behaved right before and after the start of major military conflicts (I.e. The Iraq invasion, desert storm, etc.) so we can see how the cycles were affected, if at all.

    1. Gary Post author

      The Iraq war.

      Recessions are caused by a spike in inflation, namely the price of oil. Oil is the life blood of the global economy. When it rises too far too fast the economy grinds to a halt.

      Every recession since 1970 has been preceded by a sharp rise in the price of oil.

      All the perma bears looking for a recession and bear market are premature. It’s not going to happen with oil at $50.

      This is why gold was forced into a bear market in 2013. The Fed needed to do more QE to keep the markets inflated. But oil was already trading above $100. More money printing risked spiking the price of oil and causing another recession. They needed to keep commodity markets contained. They crashed gold by manipulating the futures market. With gold collapsing the rest of the commodity complex was kept in check and the Fed could continue churning out QE to pump up the stock market.

    2. victor

      Wars is profitable things for some, unfortunately. Does US need a war? nobody want big war but small conflict would help Trump admin to re-direct public out would be not bad.
      Gold to 1330? all it need is to fire N Korea lunatics couple small range missile toward US ships and we will see what happened…

  4. Steffmeister

    I’ve positioned myself for stocks going higher, at least into midsummer and gold lower, but the people I listen to has flip-flopped 180degrees, one of them is Greg Mannarino:

    https://www.youtube.com/watch?v=RP8buIHFWhQ&t=1642s

    Greg was bullish the stockmarket and financials just a couple of weeks ago.

    Oh and Gary’s favorite is the newest guest the infamous Martin Armstrong:

    https://www.youtube.com/watch?v=DcuYmUZrOqo

    Happy Easter 🙂

  5. Emptyness

    Very interesting situation !
    In my opinion only counting cycles is stupid – you always have to integrate the political and financial situation. Both are risky at the moment. There is a realistic probability Trump is doing crucial mistakes. That could push gold much higher in April / Mai. Simultanoulsy SM would slow down.

  6. earthkitten

    Gary’s right. If news drove the stock market, we’d be at 0. Think Brexit, election, interest rates rising, etc., etc.,. Market just correcting a little. Then off to the races again.

    1. Ed

      I agree 100%. Chartists and Cyclists are counting on predictable human natures in trading but if you look at last 10 years, Global stock markets are 100% artificially supported by Central Banks. Now we have the administration that is NOT fully supported by FED but only co-operate(?) by necessity. I have feeling that Trump is going to be the biggest WAR president since FDR. I just have this weird feeling that Trump is the one who will destroy USD World’s Reserve Currency status.

  7. Don

    The put to call ratio can only be considered in the context of where the market is at when the put/ratio is at extremes. For example, after a mild decline in late November of 2015, the ratio shot up to an extreme of 1.20 followed by a rapid decline to below .60. The smart money was buying puts and selling callswell in advance of a market sell off.. The market then continued to decline and accelerated to a bottom in mid January of 2016, almost two months after the spike in the ratio to 1.20. On the other hand, a high ratio means something totally different when a significant decline that has already taken place. That’s a sign of the dumb money in play and means a bottom is close at hand.

    What we have now is very similar to what we saw in late November of 2015. Suggesting that the current high put/call ratio means that a bottom is imminent is a faulty assumption based on limited research.

    1. Gary Post author

      The market still had a nice bounce out of that sentiment extreme. Also notice that temporary bottom occurred on week 16. That’s generally too early for a final intermediate cycle low. We are on week 23. and well into the timing band for a larger ICL.

      That being said I have a feeling this may become a bit complex with a nice bounce into the FOMC meeting and another short cycle into a deeper ICL in May or June.

      We’ll see how it plays out.

      What I am pretty confident is that the market isn’t going to make it easy for bears to make money.

      Probably the best advice I’ve given people is not to bother selling short. Imagine how many millions of dollars could have been saved if folks would just follow that one simple piece of advice.

    2. Don

      I got it wrong. There was a spike of the put/call ratio to .98 in late November followed by another spike to 1.20 in late December after which the market started sliding in earnest until a bottom in mid January with a double bottom occurring mid February. The point is that a spike in the ratio can have different meanings depending on when such a spike occurs.

  8. Goild

    Many years ago someone compared Saddam Hussein deal to a trade. Where he had several opportunities to back up, but he became stubborn and irrational and so he lost everything against the ‘market.’

    So the and NK and the US may get into making a ‘trade.’ I hope not.
    If so the consequences of a bad trade might be, as we know, RUIN.

    I read yesterday: Your whole life should be a matter of thinking out your destination.

  9. Bill in Tokyo

    About N Korea, if we get past today (Sat in Asia), I think this will fizzle out.

    I’m out here in Japan these past 20+ yrs, watching the son and now grandson of Kim Il Sung, lob missles into the Sea of Japan over and over. It’s true it’s escalating, but I don’t know anyone who thinks it’s a real threat. More of a nuisance. Sure, at some point it could get serious, but I think diplomacy is the best approach. A mil strike against N Korea might cause him to launch missiles to Seoul and Tokyo, and remember that S and K Korea are the same race of peoples, and someday hope to unite.

    So again, if we get through the celebrations today w/out incident, then the party will be over, for now.

    It’s best to talk w/them, w/S Korea and China. Diplomacy is best.

    1. Bill in Tokyo

      Oh, I also think that what Gary’s saying about the S&P and gold are probably right. It’s true for me anyways that every time the S&P started to tip over, I thought that a crash was imminent, and this kept me out of it entirely. But it is kinda like swimming w/sharks – one day one will get eaten alive.

    1. Bill in Tokyo

      Well, everywhere in the world is nice, depending on what you are looking for.

      I find that living in Japan is cheaper than in the US, because my wife (a Japanese) and I live like a Japanese – don’t eat beef much, take public transportation and walk a lot, healthcare is 1/4th the price here, etc.

      Places to go, depends on the season for me. Winter – Hokkaido. Fall – Kyoto. Summer is hot everywhere, too hot for me. Spring is nice – the sakura trees are out in full bloom. But comparing the fall aspen trees of Colorado to the fall maple leaves of Kyoto – both are outstandingly nice.

  10. Alexandru Popovici

    It is no guess.
    Stocks should correct through mid May or jobs report and gold up while USD continues its fall.
    We are talking about YCLs for stocks and USD and about YCH for gold; sentiment can go any extreme at such moments so that arguing that sentiment is already extreme and that market should reverse in a couple of days may not be sustainable.

    1. Alexandru Popovici

      I.e. absent the event of a SM crash. If it crashes early next week, if a 1987 type of event occurs then ok the SM will bottom early next week. But otherwise, pendulum has to go ultraextreme first and there is plenty of intermarket reasoning for that.

  11. edwin

    Alexandru, why should anyone listen to anything you say when you are mostly wrong? Recall how you kept telling everyone how the SM would scorch and it went to new highs? You are full of crap, as they say…

    1. Norvast

      That is a bit extreme when there is merit to his arguments!

      The French elections will offer some volatility in late Apr (25 Apr) and early May (05 May) then we have the FOMC meeting on 03 May.

      There are a few of us who consider 02 Feb the ICL for the USD in which case the 20 May may be a likely place to find a DCL for the USD and SPX corresponding with a high for gold.

      What is your argument – other than abuse?

      1. Norvast

        In the meantime it makes a lot of sense for gold to find a DCL around 25 Apr when the USD is re-testing the top trend line.

        Obviously Alexandru thinks, as I do, that the USD will fail after 25 Apr and eventually fall into a DCL around 20 May as gold moves higher.

        He (and I) may be wrong but give us some credit for presenting a case, unlike you, who it appears cannot present anything other than spiteful comments!

        1. Norvast

          And if the USD fails to break higher than the upper trend line the almost certainly 02 Feb will be seen to host the ICL in which case the next ICL will be in late July which is what Alexandru has been saying in his recent posts!

          He may be incorrect, but at least give him the decency to express a rational view!

          1. Norvast

            It is not likely there will be a 1987 type crash in the stock market. We are far too early in the credit cycle to host such an event.

            We may get an ICL in late Sep or early Oct to “celebrate” the 30 year anniversary of that “crash” but the SPX is likely to advance rapidly until a mid cycle slow down in 2020.

  12. Gary Post author

    When was the last time the market was in decline ahead of an FOMC meeting? In fact when was the last time that the market wasn’t at or within a percent or two of all time highs ahead of an FOMC meeting?

    Even during the 7 YCL the daily cycle was halted prematurely and the market rammed straight back up to within 20 points of the highs so the Fed would have cover to raise rates in Dec.

    I’d say the odds are good the market will be back to, or close to the highs by May 3rd. We may get more corrective action after that though. The market is still too stretched above the 200 DMA to take off and run again.

      1. Gary Post author

        It’s also interesting that Europe is not following the US lower.

        It won’t be long before the SPX is making new highs again, although probably not sustainable ones yet.

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