Sunday, March 5, 2017

Chasing the Dream

Of the three main markets I follow, general stocks, bonds and gold stocks, gold stocks continue to be the most closely conforming to sentiment signals.  The SPX is starting to look more like bonds, sentiment wise, as bonds continued to rise (TNX fell) from Oct 2015 to Oct 2016 then fell 20% over a matter of a few weeks with sentiment still below neutral.  The only reason I am bring this up is that the Short Term Indicator refuses to show SELL spikes seen at recent tops, allowing for just enough bearishness to push prices higher absent any negative information.

The overall Indicator Scoreboard continues to hug the low bearish SELL region, but as seen in the bond chart below this may continue for a while.

The Short Term Indicator (VXX $ volume and Smart Beta P/C) remains at very low levels, but refuses to show total capitulation by falling to the SELL level.

The intermediate SPX ETFs (SDS/SSO) is also in a similar pattern to the Short Term Indicator.

The other MISC indicators, VIX P/C and TRIN, reversed the trend from last week.

Bond sentiment (TNX) remains in a range around the neutral zone as rates continue to trade in a narrow range.

Finally, sentiment for gold stocks (HUI) has started to rise as gold stocks fell over 10% over the past week following the recent SELL signal.

Conclusion.  The stock market is very extended sentiment wise but there is no definite indication of a short-term top.  One of the scenarios I discussed several weeks ago was the 1987 period, which saw a 20% run up in six months and then a 40% decline the following six months, this may be one of those times.

Weekly Trade Alert.  None for this week.  Updates @mrktsignals.

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