Mid-Week Market Sentiment Update

We cover the market sentiment backdrop every week in NFTRH but it occurs to me that I don’t do much of it here on the public site, so here is simple mid-week roundup of some but not all of the market sentiment indicators we review each weekend.

VIX is on a floor, but…

vix

…not necessarily the floor when dialing back to 2017. Suffice it to say though, players are sleeping soundly at the moment. Nice and comfy. That’s a risk.

vix

NAAIM managers had held out until recently, but are now surging to chase the market’s performance as is their customary role at minor or major tops. They can FOMO with the best of ’em.

naaim

Courtesy of Sentimentrader, we find dumb money indicators surging and smart ones fading hard. Contrary bearish if the last two cases are good fortune tellers.

smart and dumb money

Sentimentrader’s current sentiment risk view on several items…

market risk

A problem for gold and silver is that the most recent CoT data (a sentiment indicator, after all) showed a still-bearish configuration of spec net longs and commercial net shorts. However, since that data collection there was some nice damage to gold and silver prices. So I expect improvement when the CoT numbers come out on Friday.

As for the public’s perception, the shine on gold and silver prices has been dulling as the anecdotal likes of the 2 Bears (former shall we say vigorous bulls) flipped bearish and it seems the majority of casino patrons have moved on to other plays. It appears there is more work to do in flipping everybody bearish, however.

gold public opinionsilver public opinion

Finally, a look at sentiment in the long bond, which was gold’s risk ‘off’ partner during the media-stoked, nerve wracking summer, shows briskly over bullish sentiment being addressed but not near fully. The chart says that the next buy in the long bond is still a ways off.

30 year bond sentiment

Now, will gold remain tethered to the bond? Well, there is the yield curve to consider. It has been going in the steepening direction lately and if that continues under pains of inflation I’d expect gold to untether from the long bond because the very nature of a steepening curve in an inflationary environment is weak long-term bonds (10-30yrs). Gold can act as an inflation hedge if the curve is steepening. If things reverse deflationary and the curve steepens that’ll be fine too. Preferable, actually for gold stocks over the longer-term. Okay, it’s verging on a not simple post now so we end here.

yield curve

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