It appears market participants ate too much Tryptophan and couldn’t keep this market afloat. Generally speaking global PMIs were positive and it was certainly the case here in the states. Gold took a beating today as “King Dollar” appears poised to move higher. The precious metal continues to have a dismal 2013 as fears over a global economic meltdown fade away into the abyss. The last hour trading brought on selling pushing the market lower marking a new low. Small caps were hit the most, but given their run up as of late a bit of selling isn’t surprising. One day does not set a trend and for the time being we remain in an uptrend.
Sentiment is a curious animal. Notice I didn’t say beast, price reigns supreme. However, the NAAIM Investment Manager revealed something interesting last week. The most bearish bet made by survey respondents was being long 50%! This is funny, so much for a lot of bears on the street even with Twitter being a safe haven for beaten down bears. AAII Bulls continue to dominate as 47% of respondents said they were bullish. 28% said they were bearish. Who knows how these respondents are actually positioned, but it is interesting to see bears giving up. This doesn’t mean we have topped, but highlights the bull side of the trade is increasingly one-sided. Price will always give an indication and following solid rules will help protect you when the trend changes.
For those of you who like currencies it does appear the USD is about to pop to the upside. There is an increase sentiment QE is actually deflationary. Gold certainly is in a deflationary cycle moving lower. We aren’t about to figure out if QE is deflationary or not, but judging by gold we certainly see it continuing lower. 2013 lows are in sight for the precious metal and certainly a Livermore pivotal point. The YEN continues to get hammered. Perhaps the market is foreshadowing more QE out of the Japanese central bank? Anything is possible but these currency pairs are in solid uptrends.
As for our markets it is anyone’s best guess to wear this market heads next. Many are pointing to higher multiples as a reason for the market to go higher. Really? Who cares, does it go higher or lower are you prepared to take advantage? It is silly to not be prepared and to rely on an “expert” opinion on higher multiples is insane. Sadly, many will rely on experts and wait for higher multiples for this market to go higher.
Not a great start to the week as we head in to Friday’s job report. Stay tuned.
