Wednesday, July 10, 2013 10:04:27 PM
Sentiment EXTREMES...?...Gold/Silver
June 2013
http://thetsitrader.blogspot.com/2013/05/gold-and-silver-sentiment-reversal-is.html
Sentiment's crystal ball, particularly when observed at an extreme, works reliably despite conflicting and clever arguments of either a technical or fundamental nature, and plays the ultimate trump card in foretelling a market's reversal of price direction.
Sometimes the occurrence of a high volume "capitulation selling" event provides the most obvious observation of sentiment exhaustion. But there are numerous other means to assess this phenomenon and we will get to these shortly.
Sentiment extremes, simply put, tell us that there are too many traders at one end of the boat and therefore the boat is about to tip over. Sentiment can strongly suggest that the trade, as some say, has become "crowded". When someone finally yells "fire" in the "crowded" room there are so many of the market's participants motivated to get out the same door and in the same direction that most get trampled - unable to reverse their trade fast enough.
Another way of characterizing a sentiment extreme is to say that the trade simply runs out of buyers or sellers, as the case may be. The extreme price momentum in one direction "exhausts" itself of all available ammunition to continue the trend and is sometimes signaled when someone yells "fire" in the "crowded" room, but often comes to a conclusion unrecognized by most traders as price reverses direction in an unassuming manner.
Yet another saying is "when everyone is thinking the same thing, then no one is thinking". The sentiment indicators we will look at today will give us a clear sense as to whether this saying is potentially a significant and foretelling factor in future precious metal price movement.
And yes, there are indeed two players for each trade - the buyer and the seller. In our present precious metals situation, this leads us to consider the concept of shares moving from "weak" hands to "strong" hands.
As Claude Resources share price has fallen from about $1.00 last September to around $0.60 last January and just a couple months ago $0.50, obviously there have been too many shares of CGR still held by "weak hands". This will change because when the last "weak hand" is willing to sell their last share at this incredibly exaggerated market price, that obviously, will be the bottom.
You may have heard comments when a particular market bottoms and then begins to trade higher and then continues to trade even higher yet, despite "bad" news, the assertion that the bullish price movement seems to make no sense - that it cannot possibly be sustained. At this time it appears to nearly everyone the common sense question to ask is how "bad" news that used to cause a market to go into free fall now seems to have absolutely no negative effect? And to observe that as this market continues higher, it always leaves behind those traders stuck in pessimism to declare that the market is "climbing a wall of worry". That is, the "bad" news continues in the media, yet this particular market's price reversal continues upwards.
These thoughts are precisely what make this article's argument dead on target, in my opinion. That is, sentiment at extremes can and often does trump both technical and fundamental analysis. We are about to examine a number of these sentiment indicators which will leave little doubt that the precious metals market is presently at a sentiment extreme of historical proportion.
As markets usually swing from one price extreme to another, and markets usually swing from one emotional extreme to another (such as fear to greed), I believe the following sentiment indicators and their readings literally guarantee the continued reversal of gold and silver price to the upside.
Volume Put/Call Ratio
This considers the trading day's volume of puts traded and is divided by the volume of calls traded. Generally, the higher the put / call ratio, the more bearish traders are about the ETF's likely price movement, while the lower the put / call ratio, the more traders believe the ETF is bullish and going to rally higher.
(do this with any ETF...)
http://theshortsideoflong.blogspot.com/2013/04/hulbert-gold-sentiment-at-record-lows.html
...Continue reading click on the link at the top of page...he gets into some premium charts which I wouldn't/couldn't update...
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
I'm going to add one more link from Finviz.com that shows the Price to Book value of the gold stocks...note how many are trading below Book Value P/B...suggests to me some sort of bottom is near/here...
http://finviz.com/screener.ashx?v=121&f=fa_pb_low,ind_gold&ft=2
Sentiment Extreme Gold Silver
June 2013
http://thetsitrader.blogspot.com/2013/05/gold-and-silver-sentiment-reversal-is.html
Sentiment's crystal ball, particularly when observed at an extreme, works reliably despite conflicting and clever arguments of either a technical or fundamental nature, and plays the ultimate trump card in foretelling a market's reversal of price direction.
Sometimes the occurrence of a high volume "capitulation selling" event provides the most obvious observation of sentiment exhaustion. But there are numerous other means to assess this phenomenon and we will get to these shortly.
Sentiment extremes, simply put, tell us that there are too many traders at one end of the boat and therefore the boat is about to tip over. Sentiment can strongly suggest that the trade, as some say, has become "crowded". When someone finally yells "fire" in the "crowded" room there are so many of the market's participants motivated to get out the same door and in the same direction that most get trampled - unable to reverse their trade fast enough.
Another way of characterizing a sentiment extreme is to say that the trade simply runs out of buyers or sellers, as the case may be. The extreme price momentum in one direction "exhausts" itself of all available ammunition to continue the trend and is sometimes signaled when someone yells "fire" in the "crowded" room, but often comes to a conclusion unrecognized by most traders as price reverses direction in an unassuming manner.
Yet another saying is "when everyone is thinking the same thing, then no one is thinking". The sentiment indicators we will look at today will give us a clear sense as to whether this saying is potentially a significant and foretelling factor in future precious metal price movement.
And yes, there are indeed two players for each trade - the buyer and the seller. In our present precious metals situation, this leads us to consider the concept of shares moving from "weak" hands to "strong" hands.
As Claude Resources share price has fallen from about $1.00 last September to around $0.60 last January and just a couple months ago $0.50, obviously there have been too many shares of CGR still held by "weak hands". This will change because when the last "weak hand" is willing to sell their last share at this incredibly exaggerated market price, that obviously, will be the bottom.
You may have heard comments when a particular market bottoms and then begins to trade higher and then continues to trade even higher yet, despite "bad" news, the assertion that the bullish price movement seems to make no sense - that it cannot possibly be sustained. At this time it appears to nearly everyone the common sense question to ask is how "bad" news that used to cause a market to go into free fall now seems to have absolutely no negative effect? And to observe that as this market continues higher, it always leaves behind those traders stuck in pessimism to declare that the market is "climbing a wall of worry". That is, the "bad" news continues in the media, yet this particular market's price reversal continues upwards.
These thoughts are precisely what make this article's argument dead on target, in my opinion. That is, sentiment at extremes can and often does trump both technical and fundamental analysis. We are about to examine a number of these sentiment indicators which will leave little doubt that the precious metals market is presently at a sentiment extreme of historical proportion.
As markets usually swing from one price extreme to another, and markets usually swing from one emotional extreme to another (such as fear to greed), I believe the following sentiment indicators and their readings literally guarantee the continued reversal of gold and silver price to the upside.
Volume Put/Call Ratio
This considers the trading day's volume of puts traded and is divided by the volume of calls traded. Generally, the higher the put / call ratio, the more bearish traders are about the ETF's likely price movement, while the lower the put / call ratio, the more traders believe the ETF is bullish and going to rally higher.
(do this with any ETF...)
http://theshortsideoflong.blogspot.com/2013/04/hulbert-gold-sentiment-at-record-lows.html
...Continue reading click on the link at the top of page...he gets into some premium charts which I wouldn't/couldn't update...
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
I'm going to add one more link from Finviz.com that shows the Price to Book value of the gold stocks...note how many are trading below Book Value P/B...suggests to me some sort of bottom is near/here...
http://finviz.com/screener.ashx?v=121&f=fa_pb_low,ind_gold&ft=2
Sentiment Extreme Gold Silver
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