A Buy Climax Is Coming…

  1. Earlier this month, I wrote about the incredibly weak breadth in gold miners (fewer than 15% were trading above their 200-days) and how this type of action typically precedes bottoms.

Sentiment and positioning have now reset. Real yields are starting to stabilize. The conditions are now set for the next leg up in PMs. I think we’re probably still a few weeks out from that happening though (I’m looking for one more dip).

We want to see GLD ETF  holdings stabilize, if not turn up.

  1. We’re back to watching for a turn in the dollar and a resumption of the secular bearish USD trendSentiment and positioning have fully reset are no longer headwinds. And a falling dollar can have long-tailed pass-throughs on inflation.

  1. BofA thinks markets have overdone themselves and we’re now in for the “3Ps of peak Positioning, Profits, Policy in H1 & 3Rs of rising Rates, Regulation, Redistribution.”

  1. The narrative pendulum has swung clearly to the other side over the last 6-months. And, as Bernard Baruch, used to say “something that everyone knows isn’t worth anything.” Watch the SF Fed’s News Sentiment Index to see if things begin disappointing expectations.

  1. Nasdaq’s short-term breadth held and rebounded off critical levels last week. The Qs now look coiled for another run higher. We’re likely entering an accelerated Buy Climax.

  1. Bullish sentiment remains stretched but it’s likely this coming bull move will get the market over its skis and give us an official “Sell Signal”.

  1. Here are the returns so far this year. How do you think this looks by year’s end?

  1. And for no particular reason, here’s a 120-year annotated chart of the Dow Jones (h/e @NeckarValue).

  1. I practiced my knife catching and bought some Discovery (DISCA) on Friday. It got caught up in the widespread forced liquidation that started last week, sending it 50%+ lower in just a few days — its largest weekly drop in the stock’s history.
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Disclaimer: All statements are solely opinions and are for educational purposes only.

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