On the metals side, gold (NYSE:GLD) looks like it is in no mans land. If we look at the last three years in this asset class, we can see that gold has more or less formed intermediate bottoms in the middle and the end of each year. 2018 doesn’t look like it is going to be any different. Furthermore with the stock market more than likely bottoming yesterday, gold which traded down today looks like it will now continue down into an intermediate decline sometime next month or in June. Sentiment is just far too high in gold at the moment to consider a long position. Yes we still could take out the annual highs which would end up being the intermediate top but time is not on the side of gold at least in this cycle. We will only be interested in getting into the metals again when there is blood on the street. We just are not at that point yet.
Looks like we got every good entries in the likes of P&G and TQQQ. If we rally into the close today, there is a good chance that the final ICL is complete. This would mean we would have 2 to 3 months in general of rising prices in equities going forward. As the chart illustrates below, we seem to have bounced off the 200 day moving average in the S&P (NYSE:SPX) once more which is encouraging. Sometimes when putting in an intermediate low, we can at times go below the last daily low which was on the 8th of February last.
However the longer we were having two sided action in the markets, the more likely the bottom was going to occur. Why? Markets go up in a totally different fashion to how they go down. Usually they come down much quicker but as we saw in February last, everything was halted by the 200 moving average. The Nasdaq (^IXIC), and the Semiconductors index (^SOX) which are two of the sectors which are leading this bull market both have not come down to touch their respective 200 moving day averages. Taking this into account and the strong rally today, it looks like we have an intermediate bottom on our hands.
Considering that the S&P500 (NYSE:SPX) formed a weekly swing this week and when we combine this with the cycle count, it looks very likely that we printed an intermediate bottom on the 23rd of this month. Rallies out of intermediate cycles are usually very powerful. In fact, I wouldn’t be surprised if we took out the January highs over the next month or so. The last intermediate low in the spiders took place around the 14th of August last year. This means we definitely are in the timing band for an intermediate low. 5 to 6 months is usually the time-span of an intermediate cycle which is what we have here.
I wouldn’t read much into the fact that intermediate sentiment in the S&P dropped to lower levels in February than we have at present. As the chart illustrates we still are at below the excessive pessimistic level of 35. The question now will be whether we take profits on long positions when intermediate sentiment reaches optimistic extremes which will be over the next few months. If the bubble scenario is still on the table, sentiment will remain ultra-optimistic until the final top comes. We will make that decision when we arrive there.
Source : Sentimentrader.com
We will aim to cover when both the technicals and sentiment return to both oversold and pessimistic conditions respectively.