Sentiment, Gold, Seasonality

Written by Bob Lang
Written on Friday, 17 April 2009 09:35
Last Updated on Monday, 20 April 2009 12:27

April 17, 2009
Daily TrendWatch

Bulls Press On

Markets have continued to impress on the upside, rallying nearly 30% off the bottom in most cases. What's most notable is the broad nature of this rally and the rotation that has occurred. This is why there hasn't been a substantial correction yet lasting more than a day or two. Many have been cautious about jumping in, and I wouldn't blame them. Heck, it seems when you do step in that the buyers disappear and you're stuck with losses out of the gate. However, the strength in tech, energy, defense, financials and housing seem to indicate there is support. So, maybe the next dip won't be a bad place to start.

This article is written by Bob Lang, to find out more about
the services he runs for BigTrends (Extreme Option s and Grand Slam), please call 1-800-244-8736.

Sentiment Improves, If That Really Counts For Much

In early March, you could barely find any bulls to support buying this market. In fact, some data noted more than 70% bearish sentiment...a staggering number. Many players look for these 'signs' as a capitulation signal, and while we didn't see it in a volume spike, this seemed to point to disgust and disinterest. Enter the institutional buyers, who made a big splash on March 10 and have been buying ever since. What's important now is if they hang on through the first correction, which may be coming after a six week up cycle.

Gold...Still hangin' Around

Gold has seen highs around 1000 in the past year, but looking at a weekly chart it seems there has been a steady decline from that level, and a more ominous double top formation. Traders have hit the sidelines for now on the metal. Now, we all expect inflation to have some sort of impact in the future, especially with the heavy money generation and weak velocity. At some point, too many dollars in the system will cause problems, and is probably why gold does not break that 880 level for very long. With word that world banks are looking to sell their gold reserves in exchange for currency would normally be bearish, yet the price action does not reflect it. It'll be interesting to see if gold can get back over 900 soon and attract some trades off the sidelines.

GLD Weekly Chart

Seasonally Strong, and Then Seasonally Weak

We're just finishing up one of the most bullish times of the year. 'Sell in May and go Away' is coming up soon and that bell will ring. With the big rally it would make sense to take profits, but hopefully everyone does not hit the exits at the same time. Lower volatility tells us that is probably unlikely (remember, after the Nov/Dec rally VIX was coming down from a much higher level). However, the technicals are overbought and due for some kind of relief. I think many are buying the dips, but the smart money is probably getting out to wait for the next chance to buy. Remember, institutions do NOT buy at the top (generally speaking).

Bob Lang,
BigTrends.com
1-800-244-8736

Set as favorite

Share This Article

Email this

Comments (0) Add Comment