Akcieatrhy (Akcieatrhy.cz)
Markets  |  January 14, 2013 12:19:46

First week in January: sentiment

“Akcieatrhy.cz“Most sectors of the overall market in the U.S. is now in oversold zone. The first signs of this development were observed in mid-September last year. Another bias in oversold area do not take too long. If all sectors (with the exception of one or two) to move even more so in the peripheral areas, it may mean that within 1-3 months the markets begin to recede again.

Graphical Analysis 1

How does it look? The top graph shows that most sectors in the U.S. does not look too healthy. At least in terms of sentiment. Optimism is at high levels and as shown in the bottom graph, large investors and reinsurers (hedgers) sell.

Graphical Analysis 2

Graphical Analysis 3

Comments on the graph

Current buying pressure is very convincing, and it is usually a good sign in the medium term (in the next 3-6 months). In the short term, there is the quite a few warning signs of "too far and too fast". This is not necessarily a disaster, but it may be close. In terms of seasonal course and reassurance that comes after such growth, the level of risk increased further.

Other considerations

Company comment below the graph can be in contrast with our belief that markets are to grow and begin to weaken in late spring. The question is, how long can markets rise fueled by the influx of "dumb money" rushing for individual opportunities. The usual answer is: "More than you think." However, we should bear in mind that the markets in the U.S. that are currently not in terms of the ratio of profit to risk good.

When we go back to the initial graph, we can see there is one sector alone. One lone duckling, which goes against the advancing process of reduction of the gain / loss. Even if it is the short term unpleasant, is a positive finding that the sector of gold and precious metals varies in antiphase to the total of the market.

Hulbertova latest data show that only 6.3% of analysts who make their living selling analysis sent by post, recommends buying gold. This means that the sentiment of analysts, the same values ??as in the summer, when the price of gold of which $ 100. This is a wonderful example of a growing divergence known from the technical analysis in the sentimental spirit.

Graphical Analysis 4

It seems that sentimental data support a good view of the ratio of profit / loss in the precious metals sector. This does not mean that prices can not fall short. Also exhibit deteriorating outlook of the ratio of the total market. Development of the sector of precious metals to the overall market is definitely positive.

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Keep in mind that the previous paragraph was not writing a staunch supporter of the constant rise in the price of precious metals. Yes, precious metals are in a long-term upward trend, and yes, we are confident of further growth, but when there are signs of deterioration in the short-term decline and the ratio of profit / loss not hesitate to write. When the overall market is in balance with profit / loss also to write.

It is very hard to keep personal opinions on how to operate a rational monetary system and the functioning of the market at a distance from what the market week after week, month after month really going on. But who has eyes definitely tell when inflation begins to emerge. What did we mess, it turns to the growing mountain of money pierces table, which Bernanke has carefully arranged cutlery. Growth in money supply will bring inflation and very likely we'll see another trend growth phase the price of precious metals.

However, there is one scenario, which heralds the most gold and commodities mentioned. What if rising government bond yields and deaden the economy starts deflation because the money simply Zadra and stop? What if the money supply does not increase? What if the weakening prices of precious metals indicates this scenario?

This question is not intended to scare people, because we are convinced of the opposite. But we're only in the first week of the year 2013 and we still have Operation Twist in the rearview mirror. However, it would be appropriate for a variety of indicators began to show that the precious metals begin to outstrip performance in other markets. From both sentiment and relative gain / loss.

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