Gold stock sentiment indicator
I do not know how to put this but – be prepared.A good weekend to do a little research or homework.
.We all know what the markets are doing. Bit of a bounce last night, ASX did not follow wall street lead on Friday, etc.
News now presents the Thursday night sell-off as a response to COVID concerns, rather than the Fed and OECD economic outlook which are both dismal.
I suspect this could be deliberate as, if the markets wake up to the fact that most if not all economies are in recession and recovery is going to be anaemic, markets would respond accordingly.
The jobs numbers trigger has already been pulled.
By attaching the markets to COVID with an expected worsening situation and possible second wave, declines will be gentle and can be juiced with announcements of vaccines and treatments.
Don’t worry about the economic outlook!
.A little red light has been flashing in my mental background all week. My EWS (early warning system) is now going CLANG, CLANG, CLANG.
Normally the indicator responds reasonably well (up a few %) when producer stocks do nicely but this has not been happening for a week. It has stayed relatively flat.
During the week I was able to take nice profits on 5 stocks which included one junior.
This week, my producer portfolio did OK.
My junior portfolio (13 stocks) was relatively flat though down 3.2% on Friday and 1% for the week. No big deal.
There was a dip in the markets but nothing too alarming and a nice bounce on US markets Friday.
Yesterday the sentiment indicator fell by 18.3%. This is the SECOND BIGGEST DELINE in 5 ½ years.
It is the single largest fall in the shortest term indicator at 35.2%. The next biggest was 33.3% on the 19/3/20.
Keep this in mind – we did not have a huge capitulation sell-off yesterday.
Below is a list of previous big falls. This is provided to give you the opportunity to DO YOUR OWN RESEARCH.
What I suggest you look at is what happens in the following day/week of such an event.
I will be reviewing what happens to the US market (DOW, etc), Aussie market (XJO, etc), POG in A$ and US$, a few gold sector producers and juniors. I WILL NOT BE POSTING RESULTS.
There are only 5 events where the indicator fell more than 15%. The dates are:
28/2/20 15.7%
9/3/20 19%
12/3/20 18.1%
19/3/20 16.7% According to the XGD the 19th and 20th were the bottom of the capitulation sell-off.
12/6/20 18.3%
Keep in mind POG did not crash and burn during the last 6 months. Neither did it do so over the last couple of days. Actually gold looks OK.
What I think we have seen is a broad-based sell-off and/or profit-taking. The question is WHY?
Yesterday many juniors were punished and most had rebounded, similar to the previous capitulation.
This could be the bottom for the gold stock sector! Or is it telling us something else?
Gold sector sentiment is, according to analysts and blogs, still relatively high.
I am going to take my time over the weekend to try and work out what the hell is going on.
Being fore-warned is being fore-armed. Difficult to present this information without causing concern.
This arvo I am going to pop down the pub for a beer and punt and watch for a sign. My tea leaves and crystal ball are telling me nothing.
I have my suspicions about what is to come.
Here is the indicator.
