Treasuries, gold and silver and a stretched stock market

Bespoke notes today that AAII bullish sentiment has fallen to 25% and in an earlier post they put out this week, Bespoke notes that the sentiment as well as the S&P 500 advance / decline reading is as oversold as it was in August, 2010.

Gold and silver saw a strong rally today (+2.5%), but we arent sure if it was a dramatically oversold bounce, or the fact that the weak Philly Fed Index has put QE3 back on the table. Gold didn’t get much of a bounce when the April payroll number was reported, so attributing a bounce in gold and silver (particularly gold) to QE3 could be dangerous.

Still when Ben spoke in January gold saw a huge rally as it seemed at the time that QE3 was on – then he took it off,. and gold fell. Gold used to rally when Greece was in the headlines, but not so much in the last few weeks. Tells me correlations are changing.

We are out of all our gold and silver and have been for a while.

Treasury volume is heavy the last week and that is never a good sign. That is a quintessential flight-to-safety tell. We are going to try and get charts up, and the chart of the TLT could be forming a big triple top. However with economic conditions such as these, less emphasis needs to be placed on technicals. Given the 10-year interest rate yield, the S&P 500 should be far higher.

AMAT tonight, Facebook tomorrow, and the indices are weak into the close. I thought i heard that the dividend yield on the S&P 500 is now ahead of the yield on the 10-year Treasury for only the 3rd time in 50 years ? That cant be right but you get the picture. Sentiment is nearing an extreme negative, and the stock market is cheap. hmmmm….

 

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