Friday, December 27, 2013

Some Friday newsreading

Here's some stuff:

Bespoke - individual bullish sentiment back above 50%. But:
With individual investor bullish sentiment crossing the 50% mark, should investors be worried? While the current level is definitely elevated, it's by no means without precedent. As shown below in the chart of the AAII reading going back to 1987, sentiment has been above the 50% mark many times in the past. Coming out of the financial crisis, it has taken a long time for investors to gain trust in the stock market. Longer term, the market needs investors to have faith in it as an attractive asset class. As long as earnings can keep up with stock prices and the economy continues to grow, it would be nice to see sentiment stabilize at a more elevated level.

It's nice when an analyst goes back to beyond the 2000 crash to look at longer-term data, isn't it? Because sentiment should do something different in a secular bull than what it does in a secular bear.

Reformed Borker (Bork Bork Bork!) - chart of the day: overbought. But:
It’s easy to poke fun at people who’ve been using valuation or some other fundamental indicator as a market timing signal. It’s demonstrably ridiculous and the results for the most stubborn among them have been disastrous.

Equally ridiculous is the idea that any one or two technical indicators can tell you when an uptrend or a downtrend is through running its course. We all have our favorite technical measures of price but, in the end, all of them are subservient to price itself.
Apparently the S&P500 has been overbought for all of 2013:

But you and I both know that something can stay overbought for a long time - just like something such as gold miners can remain oversold for one hell of a long time, no?

Here's what Chubby says:
The next time someone cites this or any other single indicator (fundamental or technical) to bolster their bull or bear case, be sure to reply with “So?” No signal operates in a vacuum and, as I like to say (perhaps too often), it’s not different this time – It’s different EVERY time.

Not all of the metrics you choose to follow are going to be telling the same story at once and some of your signals – even your preferred ones – can spend what feels like forever in the cosmic penalty box, mattering less than the price of tea in China.
If you're doing TA, the first thing you should look at is price action, no?

IKN - Chilean copper mines are high-grading. Dunno why they should have to do this at $3.30 copper.

Mineweb - metals expected to go up in price in 2014. "Expected" means the ignorant guesses of a bunch of analysts who probably don't have that great a track record to begin with. You'd expect increasing world demand to boost prices, no? But no less than Jim Rogers (the commodity god) tells us that in a secular equity bull, that doesn't happen. So it'll be interesting to see if "this time is different".

Qz, the Middle Persian word for a joke that destroys the flow of a comedy program - Jewelry was the standout in America's holiday shopping season. Well! The gold bears should be thankful that jewelry isn't made out of gold! Wait... um... what?

Boing Boing - $1b/y climate denial network exposed. Here's a tip for ya, buddy: if your goldbug newsletter analyst is also a hardcore global warming denier, then you can ignore every single thing he's saying. Why? Because he's just proved that he's not there to help you invest. He's proved instead that he's only there to regularly exhort you to vote Republican.

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