Thread SENTIMENT Indicator Warning/Alert ~
Gentlemen;
Fwiw; my proprietary SI "pom-pom/cheerleading/flag waving" super sniffer/detector alarm just went off yesterday... woke me up from a nice damn nap, I may add...
Just as it did for the "End of the Bear Market part VII" (vbg) - here of late when everyone was putting a fork in the Gold move back in October...we're now up nearly 30% in 8-9 weeks on the HUI and 30-50%+ on some individual stocks and we've hit the upper band of thread sentiment just as we hit the lower band back in July and October.
I'd humbly suggest that people go back and read the posts and re-visit the "sentiment level" on this thread for Gold Stocks back around Oct 10th with that intra-day blow off to HUI 102ish (closed @ 107) and again around Oct 21st with what in essence became an interim double-bottom with that pullback to HUI 106...(PS: Let's quit even acknowledging the XAU here folks... the bastardization of adding copper plays etc to the index in the last couple years, distorts historical comparisons and that along with the influence of the weighting that the hedgers have within the XAU... have made it USELESS as a "GOLD" barometer.... the HUI, just the HUI and nothing but the HUI ! - should be spoken here...
(so it is written, so it shall be done (VBG)
There weren't as many buyers into that pullback here as one may think - just as there weren't nearly as many sellers into the May blow off top as may be thought.Go back and read the posts here during those timeframes, it is an interesting study in sentiment.
Here's a self-aggrandizing bottom call for Oct 10th (vbg):
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To:Frank Pembleton who started this subject
From: SliderOnTheBlack Thursday, Oct 10, 2002 2:41 PM
View Replies (5) | Respond to of 23469
Let's gggggggeeeeetttt rrrready to rrrrumble ~
Start re-loading boys...
NEM has channeled well as a trader down here... $22/$23 to $28/$29 time & time again.
DROOY close to/under $3 - KGC in the $1.70's ? ....gimmie, gimmie, gimme...
KGC, DROOY, GG, GFI, HGMCY, NEM et al getting reasonable here.
In the last 6 mos from April 10th to today...the HUI has only traded under HUI 100 twice... July 26th closing at 95 & on the 29th - where it actually closed over HUI 100.
This is close enough to begin re-loading/adding.
I'm buying today...
We haven't breached the 50 dma crossing under the 200dma yet... untill then; stops shouldn't be triggered. Use them...and untill we actually get a cross-over... use these pullback/smack downs to trade/add, or re-enter, or re-load.
GOLD: foi est tout ~
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The just of it all; is that supply and demand - nothing else; determines stock prices.
And sentiment drives demand.
Our "SI Sentiment" indicator from the old days of the "original" SI SD in the OSX run from '98 to '00 to the morph from "black" to "yellow" gold here with the birth of SI SDII...has never failed to be the most accurate of all interim and longterm technical indicators and fwiw; on a short-term basis - it's leaning heavy here into the red zone once again....the number of posts, number of new arrivals and the sentiment; all confirm a short-term profit taking opp building here, if not occuring presently imho.
I sold 1/2 of what I bought Oct 10th yesterday... raised stops up very, very tightly on another 1/4 (that could trigger monday) and reasonably tight on the final 1/4th fwiw as well - which would take me back down to a core only position.
[ Ideally, I'd like to drop the next 1/4th at expected profit taking if we reach the prior HUI 150ish resistance/high and the final 1/4th into what I see as the interim upside potential high off of any market events of 170ish if this rally sticks, or if we see something escalate threatwise on the bio, or nuclear side in Iraq, or on the terrorism front.]
I am not saying sell gold stocks here; nothing has changed on the longterm fundamental picture for gold, or gold stocks; but on an ongoing interim TRADING BASIS... the SI Sentiment Indicators rarely fail and I just want to point out that we're entering the "profit taking zone" on an "INTERIM TRADING BASIS" here.
I will always keep a solid "CORE" Gold/PM position and for the near future will continue to do so - as the geopolitical environment dictates that we must. That "core" position may be 10 to 15% for those who like to be balanced within the market; to perhaps 25-35% for those who like to lever individual sector, or commodity plays on a portfolio weighted basis.
Yes; fundamentally the USD is taking it's licks as it should and will fundamentally have to, as the the printing presses continue to flood the world in green ink & American paper...BUT ! Bush has just made a mid-term transition with his Economic Team and the one thing that will NOT be allowed to happen in the very near term ( a Rogue Wave/Terrorist event aside) is the ESF/PPT allowing a free-fall of the US Dollar, or the market here as we entering the final boarding stage for War with Iraq.
There have been numerous charts being dug up of late from the Gulf War showing the intitial blow off within the equity markets/a pop in defensive stocks/gold etc during the build up readying for War... and then the rally in the broad market and reversal of the defensive plays - as we move into a full stream/on the ground offensive.
That's all I think we're seeing occuring here...and I think we need to extend the time horizon expectations for the next major up leg for gold occuring.
One reason for extending that time horizon is that Greenspan will imho; be looking to pass this post-bubble/debt orgy collapse onto the lap of the next Fed Chairman and as the expiration of his term and obvious retirement is not too far down the road; one must factor in the ego of the Fed Chairman as well as the re-Election desires of GW over the coming 12-18 very, very important months...as he undoubtedly is reminded on a near daily basis how his father let a deteriorating economy destroy record public approval/support numbers with the 1st War with Iraq.
For that reason and one other; I think the timeframe of the when, not if - coming Gold Bull will be extended.
That "other reason" is what we just saw with this recent rally in the broad market and top of the Bond Bull... that being that there is STILL the CASH and more importanly; there is STILL the WILLINGNESS of the Bulls to jump on yet another "end of the Bear" train and you can be assured; that once bombs start falling in Iraq and we mobilize ground forces; that they'll be playing that inevitable, if not completely predictable pullback; as yet another "bottom" and will be trotting out all of the old Gulf War Charts to back up their claims that THIS is THE bottom yet again.
You can't count the Bulls out, when they still have "both" the ABILITY (cash - thanks to the top in the Bond Market) and their WILLINGNESS intact.
I also think that they'll throw even more money and that we'll see even more of a public participation in the next Rally effort; if not only because of a natural patriotic knee-jerk response such as we saw initially post 9/11.
Once the dust clears off of the Fed/ESF & PPT adding a little accelerant to that move.... THEN, I think we finally begin that final collapsing leg of PAIN to where the realities of the still unfathomable time and cost elements that securing the Homeland and fighting the War on Terrorism abroad are going to bring; as well as the still ridiculous valuations seen in today's markets - especially factoring in pension shortfalls, option & accounting abuse which has still not been washed from the valuation metrics used in pricing this market.
In a nutshell; I think for those that sold into the May HUI/Gold stock rally and who bought back in, or added strongly in the July and October pullbacks - this is a profit taking/selling opportunity forming here - building into the first bombs dropping and the mobilization of ground forces in Iraq.
I'd strongly expect resistance and profit taking at HUI 150ish's prior high.
I'd never waiver from maintaining a core position, but for those who do trade the Gold/PM sector on an aggressive portfolio weighted basis.... I'd sell into this final Iraq/War rally in PM's and patiently wait once again for a re-loading opp in that inevitable feel-good rally (and defensive play selloff) that we're going to see once bombs start dropping and tanks & troops start rolling into Iraq.
PS: GG hit a new 52 week high, GLG very close (actually broke it intraday)... in the early stages of the Gold Bull we saw the So African stocks get the added earnings benefit of paying expenses in Rand, but selling in Dollars... that is going to reverse as the Gold Bull matures and the inevitability of a continued falling Dollar/rising Rand continues... the unhedged North American Gold Stocks are now and will continue to be THE plays.
...just my usual longwinded .02 cents... it's been a while (vbg).
Don't miss profit taking opps like these ... this won't be the last rally and we haven't seen the last pullback/re-entry/trading opp either.
The self-serving duality of Greenspan desiring to retain some semblance of a positive legacy and passing on the final collapse of the Orgy of the late 90's to the next Fed Chairman along with GW's re-election desires should not be under-estimated as a factor over the next 18 -24mos that may cap the gold move short term and extended what ultimately will not be able to be "capped forever"...
The "managed" descent of the US Dollar and equally "managed" ascent of GOLD will be inevitable; nearterm volatility of either is a trading opp imho....so don't be afraid to ring the cash register along the way.
Ciao~ |
