Stocks traded in a tight range, but it was GLD leading the way higher. Overnight the Nikkei broke out in heavy trade a good sign for Japanese stocks following the move yesterday. It is clear there is a new uptrend in GLD from today’s move as well as US stocks and Japanese stocks. Back to the action, at the end of day today was quite positive with stocks pushing back to the highs of the session. Although gains were muted it was still nice to see us close out near the highs of the session. Our uptrend remains in place and we continue to stick to our plan on riding this wave higher as long as we can.
Before we get into the Nikkei and GLD moves we should touch upon sentiment before we proceed. II bulls and bears continue to widen further apart, but it has been the same story for much of this year. Bulls are running rampant in the newsletter arena and they have been right! NAAIM exposure index ticked higher this week to 89%. A few bearish bets were placed, but managers within the index as a whole took on more bullish bets. AAII bulls shrank to 35% while bears inched higher to 24%. Those who are neutral remain dominant in the survey. The small investor simply isn’t buying this rally. It will be interesting if the AAII Bull % gets back to frothy levels and if it will market some type of top. Will they be late to the party?
If you didn’t notice overnight Japanese stocks broke out from a small consolidation area. The index has been dormant since the beginning of the year. In fact, year-to-date the index is down 5.7%. It is up 18% year-over-year, but last night’s session was quite bullish. Chart:
As you can see the big move in the index was accompanied with a big spike in volume. We have lacked this kind of move in the US, but over in Japan this is quite bullish. Perhaps a new stimulus or QE is on the way. For now, all we know is price is bullish and wants to go higher. The reason is meaningless and it will become clear later in the future.
The gold bugs were certainly happy to see the precious metal back above the 1300 level and boy did it move today. GLD is the most common way to play the precious metal and after today’s move is certainly indicating higher prices are ahead. We saw from yesterday’s CPI figures food prices are moving higher and perhaps gold is echoing the same sentiment. GLD may not be a perfect hedge against inflation, but many see it protection from runaway inflation. Price is indicating the precious metal is about to increase in value.
Get out and enjoy the great outdoors this weekend. We have a market in a solid uptrend with many indications it wants to push higher. Ride the wave higher with Big Wave Trading.
