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DAILY SENTIMENT REPORT

Wednesday, June 12, 2013 8:55 pm EST by Jason Goepfert

Jump to: Risk Summary | Studies & Updates | Equity Indicators | Stocks and Sectors | Commodities | Comments

eadlines Archive » Smart/DumbMoney Chart »

Sentiment towards gold is clearly in "extreme pessimism" territory, withndicator score showing maximum bearishness only a few weeks Still, gold has not been reacting well to these extremes. Bearket behavior »

The Total Put/Call Ratio has been above 100% for seven straight daysw, which is rare during a bull market. All four other instances saw

ks chop to a lower low over the next 10-15 days, then form a bottom2/06, 3/1/07, 8/1/07 and 6/9/11). It was less consistent during a bearket, but there was still a 5-15 day window when stocks tended to formose multi-week bottoming process.

The Smart Money is 42% confident in a raThe Dumb Money is 54% confident in a ra

sk Summary

Short-term Risk Level: 3 Info » Chart »

Intermediate-term Risk Level: 6 Info » Chart »

Note: The formatting in this sample report is distorted due to the PDF conversion.

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Bottom Line inally we're seeing something of a confluence ofessimism on a short-term time frame. When weee multiple down days like we have, there is a slightendency to see some relief, but even more thanhat, we're seeing some extremes in sentiment in

what is still an uptrend. It's an iffy one, but as long

Bottom Line (Last changed 06/11) As has been the case for awhile, mostly we're seeingnegatives on a 1-3 month time frame. The risk levelhas decreased a bit due to a slight lessening ofbearish (for the market) extremes, but risk is stillabove average. That's because of a still-widespread between the Smart Money and Dumb Money,

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s the S&P 500 remains above 1600ish, readingske this suggest a lower short-term risk level.

as well as the numerous Active Studies below thatare clearly skewed to the bearish side of the ledger.

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udies And Updates Archive

of the rules of thumb we go back to time and again, onry time frame, is that a market that continues to rally inface of extreme optimism has a low likelihood of an

minent reversal; a market that continues to fall in spite of

This is very similar to the last bear market. The chartbelow shows the same kind of behavior that we're seeingnow. Despite several forays well into extreme pessimism,traders just kept right on dumping gold. Every time the

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eme pessimism is likely mired in a longer-term bearket.

t latter one has become a concern for gold.

chart above shows an aggregate indicator score ford. It uses a combination of sentiment surveys coveringoad population of traders, newsletters and strategists,

well as traders' positions in gold futures and assets inRydex Precious Metals mutual fund.

w weeks ago, the score essentially reached 0%. That'sfirst time in the score's history - 20 years - that it hade so. And yet it has been having difficulty maintaining ay.

discussed this almost exactly a year ago . At the time,d was acting "odd" in relation to past instances when thee had become extreme. It simply wasn't responding as

hould, raising the probability that the long-term uptrendended.

can see from the chart that even though the score hasped well into extreme territory several times in the pastr, gold hasn't reacted immediately, like it had for muchhe past 10 years. Even the recent score of 0%,wing maximum pessimism, has only halted the sellingnot led to a rally, so far.

score touched extreme optimism territory, gold peakedalmost immediately.

Click here to view larger chart

The current high level of pessimism suggests we shouldsee at least a temporary (1-3 month) counter-reaction ingold. Perhaps it will lead to something larger and longer-lasting, but the way price has reacted in the face ofextreme conditions lately is not encouraging.

ated Studies 0/13 Precious metals speculators go net short for the first time

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ctive Studies Retired studies »

Bullish for equities Bearish for equitiese Description Priority Date Description Prio

7 Risk Appetite Index shows risk aversion Low 06/10 Cluster of Hindenburg Omen signals Low2 Low OEX put/call ratio during an uptrend Low 06/05 Surge in OTC penny stock volume Hig

2 A new high for the a/d line Medium 06/04 Oversold breadth soon after a 52-week high Med

05/31 Smart money record short in DJIA and NDX Med

05/23 Rydex mutual fund traders are optimistic Med

05/15 Stock / Bond Ratio jumps above 3 Med

05/13 Stocks and bond yields rise together Low

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04/04 Market advisors persistently bullish Med

03/15 Smart vs dumb money dichotomy Low

03/01 Extremely negative "net worth" Med

02/07 Mutual fund inflows surge Med

quity Market Indicators Complete list

percentage of our indicators that were bearish (for the market) jumped above 30% in mid-March. That 30% thresholdbe considered extreme, and while the percentage can go higher, to 40% or even higher, stocks usually struggle for 1-3

nths after it hits 30%. The S&P 500 did struggle a bit for the next month, not really going anywhere. It has since goneo a new high, while the percentage of troublesome indicators has dropped back to a neutral level.

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More history: Short-term Score Long-term Score Indicators At Extremes

Indicators At Extremes * New extreme

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Bullish for equities Bearish for equities

* STEM.MR Model - NDX * Price Oscillator - S&P * Price Oscillator - NDX * Intraday Cumulative Tick - NYSE * Intraday Cumulative Tick - NASDAQ * Down Pressure - S&P * Down Pressure - NDX * Put/Call Ratio - Total of All Options * Put/Call Ratio - Total of Moving Averages * ISE Sentiment Index * VIX * VXN Liquidity Premium - QQQ Up Issues Ratio - NYSE STEM Model Inverse ETF Volume Odd Lot Short Sales Put/Call Ratio - OEX Moving Averages Put/Call Ratio - OEX/Equity Spread

NH/NL Ratio - NASDAQ Sentiment Survey - Market Vane Sentiment Survey - Consensus Insider Insights Buy/Sell Ratio

Mutual Fund Flows NYSE Available Cash

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ocks And Sectors Sector breadth

months on end, we haven't seen much of a change in the sector overbought/oversold levels. They have stayed mostlyhin neutral territory, or dipping in and out of mild overbought territory. Overall, nothing to be too worried about for aader-market perspective.

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See this Data Brief for more background on the Sentiment Scores

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urrencies And Commodities Complete list

latest Public Opinion data show that there was a big reversal in sentiment in the latest week, particularly in theencies. The pound , Canadian dollar , euro , franc and yen all showed substantial increases in optimism as they rallied

m extremely pessimistic conditions and are now back into neutral territory.

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ember Comments

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