Mixed Signals

• Posted by Robert Sinn
• on April 26th, 2012

Yesterday I found myself unmuting a certain financial news network more than I normally do. Every single one of their fast money traders had nothing but negative things to say about precious metals and mining stocks. It was particularly interesting during the 5pm show when the guests continued the negative spin on gold and the miners despite the positive market price action in the face of the unanimously negative spin given to the FOMC statement and FOMC members’ forecasts for the path of unemployment and interest rates. For someone who has traded both sides of the gold market regularly during the past several weeks I have been impressed by the metal’s resilience in the face of pervasive bearish sentiment. Yesterday price broke hard following the FOMC statement yet someone stepped in and bought size in the June futures at $1625.00:

 

This morning $GC_F is 30+ points higher and I haven’t heard a good explanation as to why (other than some dollar weakness) – I learned a long time ago to give extra weight to market price action that is contrary to the herd’s interpretation of the news.

In terms of the overall equities market, yesterday’s action was certainly impressive although here we are back at $SPX 1390+ with generally worsening economic data and May fast approaching. Perhaps the “sell in may and go away” meme has become a bit trite but it is hard to argue with the seasonal weakness that seems to always manage to seep in at some point during the May/June time frame. Sentiment is fairly mixed with a healthy dose of caution sprinkled around  - however, the equity only put/call ratio and some of the implied volatility priced into various options markets indicates that market participants aren’t very concerned about any major problems cropping up anytime soon.  A lot of mixed signals and charts that could make outsized moves in either direction have me doing a lot less and observing a lot more.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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