Sentiment speaks: turn off your tv now
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
I know this is my third article this week, but I have been in Cancun for Passover for the last two weeks, and now that I am back, I have a lot to say. And, as those that read my articles frequently already know, I am about to hit you over the head again with another dose of market reality.
As we moved into the middle of March, I warned the members to prepare for some volatility before the market continued on its way over 4000SPX. In fact, I specifically highlighted the 3850SPX support region and that a test of that support, which if held, would propel us sooner rather than later to over 4000SPX.
While the market pulled back into the 3853SPX low struck almost two weeks ago, many in the market were blaming the pullback on the rise in interest rates. And, the manner in which many in the media were portraying this relationship were making it sound like the world was about to end.
If you look at the market today (I am writing this as I am watching CNBC on a plane on Monday afternoon), interest rates are consolidating near their recent highs, yet the markets are strongly breaking out to new all-time highs. In fact, while interest rates have been consolidating near its highs, the S&P500 has rallied 6% off the 3853 low struck a few weeks ago.
So, as I am watching CNBC this afternoon, I hear an analyst explain to me with absolute certainty that the reason the markets are breaking out with interest rates this high is because this rise in interest rates suggest that the economy is in good shape. Yes, you heard me right.
I guess I am expected to turn my brain to the "off" position in order to accept what I am hearing this afternoon. I mean, were they not just telling me that as long as rates are this high, it will hurt the stock market?
And, not a single person ever addresses this inconsistency within the print or televised media. For all of you that follow the news and media so intently in order to make your investment decisions, I really have a question for you: How do you continue to follow "analysts" who are so full of excrement?
I guess it is really no different than when all these same analysts continue to tell you how a rally in the US Dollar causes gold to drop. I would imagine they would not expect you to actually look at a chart.
In fact, for the greater part of the last 3 years, the gold and dollar markets have basically been trading together in the same trend. While this correlation is not absolutely perfect, an investor who is being honest with themselves has to note the fact that, for the most part, gold and the dollar have been trading in lockstep for the last 3 years.
Consider that gold had been rallying from 2018 until the middle of 2020, and it began the current larger degree pullback we have seen in early August of 2020. If you then look at the dollar chart, you will see that it also rallied from 2018 until it topped in late March of 2020 (a little over 4 months before gold), and then both began a multi-month pullback.
So, consider this article yet another dose of reality this week. I have many of members tell me that they have done so much better in the market when they have stopped reading much of what is printed out there, as well as when they turned off their TVs.
I used to trade by news until joining one year ago. It took me three months to stop watching the news (I did) and I have had the best overall nine months of investment I have ever had. Ever.
The reason is that there is simply no consistency in the messages, resulting in very little usable information to help you with maintaining on the correct side of the market.
And, as one of my members posted recently in our chat room:
A journalism friend once asked me "do you know what we call the stuff in between the ads? Filler."