My inner trader tells me to wait for the oversold condition to clear up and watch the market reaction for signs of future direction. Meanwhile, Mark Hulbert reported that there is too much bullishness in boutiques s and in gold, which are contrarian bearish signs. What one trader sees may not make much of a difference to another trader. If the existing vaccines cannot stop the 501v2 virus, then we’re back to square one again and we’ll need to wait for many months for new vaccines to be developed. Gold bugs have no one else to blame if they underperform if there is another upleg in gold prices. There are several reasons why New York stands out. James Hamilton at Econbrower points out that a new financial conditions index is plunging which indicates further near-term deterioration. The chart below shows the Morgan Stanley Cyclical Index (CYC) relative to the S&P 500. CYC had been leading the market but recently failed at a relative uptrend line and is now testing a support level, indicating perhaps a change in market consensus that the economic recovery is on track. Meanwhile, the Amex Gold Bugs Index (HUI) barely challenged its old highs.
Who knows, maybe the era of peak gold has arrived (see articles here and here). I showed before that gold mines can be modeled as a series of call options on the gold price and production costs are rising at the major mining companies. These price targets are usually for 12 months, so it is clear the analysts are confident for many as longer-term plays, despite valuations that appear lofty for the short term. In the short run, however, Bespoke reports that the S&P 500 is 3 standard deviations below its 50-day moving average – a highly oversold condition. Read annual and quarterly reports of companies and do some fundamental studies. The advent of new trading systems along with the brokerage companies ensure to the investor that long term trading is also possible online besides day trading. The act would also require public companies to disclose whether they are owned or controlled by a foreign government. Many of the stimulus projects undertaken this past year have been financed, not by the central government directly, but by local governments, including cities, counties, and provinces.