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A Warning Sign for the broad stock market?

Big Al
August 2, 2016

Guest host Chris Temple of The National Investor visits here with Dana Lyons of J. Lyons Fund Management. They discuss a statistic Dana just released, arguing that active money managers have gone “all in” in stocks, suggesting that there may be little more buying “fuel” ahead. (There are a few spots where Dana’s voice fades a bit, making the interview a little tougher to keep up with — apologies in advance!)

Below is the chart referenced in our discussion. Dana added later off-mike that low recent flows into inverse ETF’s likewise suggests complacency on the part of money managers.

NAAIM-Aug 2016

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Discussion
64 Comments
    DFS
    Aug 02, 2016 02:35 AM

    https://pbs.twimg.com/media/CoZeQLVW8AA0lz6.jpg

    The economy is doing OK? I don’t think so.

    Aug 02, 2016 02:44 AM

    Thanks Chris. Since I’m my own money manager, I believe the final 10% or less of gains is the riskiest part of a market. Anyone who isn’t trimming at this point isn’t investing, but gambling. However, I guess that’s what we’re all doing. I added to my holdings this morning in the ETF SPXS. Not sure I heard a bell but with GS and JPM both warning of near term negative possibilities, I think some of the big money will be taking heed. JMO

      Aug 02, 2016 02:07 PM

      Good comment…as I have said many a time, the first rule of managing a portfolio is to do no harm. Too many ride big moves up and then right back down. You go broke neither by taking profits, nor by now and then not staying in til the exact top of a move. There will always be more opportunities later. For those who overstay welcomes, their task ends up not building a portfolio, but constantly needing to REbuild it, after 20%, 40% or larger losses. You’re doing the prudent thing, my friend.

    Aug 02, 2016 02:25 AM

    Heavyweight analyst and investor Jeff Gundlach has just issued a massive “Sell everything except for gold bullion and gold stocks” signal.

    This “parade of the institutional heavyweights into gold and out of equity markets” is occurring, ironically, while amateur investors line up to cheer the US stock market higher and higher, like cows lining up outside the slaughterhouse, all believing it’s going to be a wonderful life. – Stewart Thomson

    http://www.321gold.com/editorials/thomson_s/thomson_s_080216.html

      Aug 02, 2016 02:28 AM

      I think, as always, in any major conventional market dip that the PMs and PM miner stocks will be equally as hit simply because so many people have bought on leverage.

      PM stocks will probably be the place to be after a 8 to 10 percent drop IMPO.

        Aug 02, 2016 02:38 AM

        I think you’re right if a decline gets “disorderly” but I believe the miners will do the opposite if stocks face relentless but relatively small daily declines.

          Aug 02, 2016 02:42 AM

          I agree Matthew — as long as there is not forced selling of PM equities then, yes, they should hold up. If other selling in stocks, junk bonds and elsewhere got to the point of “no bid” vacuums and liquidity issues, that’s the point they’ll get sold with everything else, most likely.

      Aug 02, 2016 02:30 AM

      👍

      Aug 02, 2016 02:19 AM

      Thanks

    Aug 02, 2016 02:34 AM

    I don’t remember who asked about Golden Arrow Resources 6 weeks ago but it has doubled since I posted the following chart and said that it looked bullish.

    Most participants were probably sure that the 90 RSI in May had ushered in a lasting high but the chart clearly indicated otherwise.

    http://schrts.co/cU2gPo

      Aug 02, 2016 02:18 AM

      Thanks another good sign

        Aug 02, 2016 02:31 AM

        I am glad the trolls did not drive you and EX Off.

          Aug 02, 2016 02:25 PM

          Yeup…..Still here, but I started posting on other sites for the first time in years to gather new opinions, get more rapid-fire stock discussions going, and give everyone here a break from my shenanigans. I’m not really that into the endless political debates either, and get enough of that in the daily grind of life in the US.

          It did get very frustrating having certain posters troll on my comments, poke at the “value” that I brought to the table, and honestly it wore me down and killed my desire to post certain content here on the KER.

            Aug 02, 2016 02:38 PM

            However, I really enjoy the conversations with many of the KER crew, get great insights here every day, and still feel this is one of the best investment forums on the resource sector that I’ve come across.

            All the best!

      Aug 02, 2016 02:31 PM

      That is one sweet chart there Mathew.
      Dr Alexander Elder”The New Sell and Sell Short” calls this the “Hounds of Baskerville”
      Once again you nailed it.

      Aug 02, 2016 02:09 PM

      Thanks Matthew – could have been me. Grateful as always, A

    DFS
    Aug 02, 2016 02:07 AM

    http://www.silverdoctors.com/headlines/finance-news/deutsche-bank-is-bankrupt-derivatives-collapse-coming-jim-rogers/

    I heard roasted swan is quite tasty! Should be easy to catch that black one!

    DFS
    Aug 02, 2016 02:16 AM

    http://news.goldseek.com/GoldSeek/1470073121.php

    The world economy is doing well? I don’t think so!

    Aug 02, 2016 02:21 AM

    Remember that big gap ($2.28 for GDXJ) in early June? It is now WAY below the market:

    http://schrts.co/RdETR5

      Aug 02, 2016 02:47 PM

      You were spot on amigo, and it was a good lesson for me in how a bull market behaves when so many are on the sidelines wanting to get positioned. Great call !

        Aug 02, 2016 02:13 PM

        I really thought it would make a marginal new high and the pull back to that gap and consolidate in sideways to down channel for a while. Thank goodness I kept core positions in place. When I finally got the message that miners weren’t correcting, I added to positions, but it’s been challenging for me to throw out TA concepts that had served me well during the Bear and get fully on board with the new tendencies for things to just stay overbought in the Bull.

        I have no problem making mistakes as long as I can learn a good lesson from them. This was an impactful experience for me, so thanks for posting the update.

        All the best!

    DFS
    Aug 02, 2016 02:28 AM

    Stocks will continue to go up! I don’t think so!

    http://www.advisorperspectives.com/dshort/updates/Market-Valuation-Overview.php

    I see reversion to the mean, but that’s just my opinion!

      Aug 02, 2016 02:43 AM

      It doesn’t matter if a crash is likely or not, the risk-reward profile sucks.

      You mean reversionists will be correct!

    Aug 02, 2016 02:37 AM

    Gold looking good

    DFS
    Aug 02, 2016 02:39 AM
      Aug 02, 2016 02:43 AM

      But far more reliable NEWS and some great documentaries on RT…I’ll take them over MSNBC, Faux News and the rest any day.

        Aug 02, 2016 02:47 PM

        The recent wave of terrorist attacks across Germany and France resulted in lots of people I know preferring to listen to RT rather than the BBC or Sky News.

        The BBC seemed so reluctant to mention the islamic connections with the the killers that they just, at times, almost sounded like some pro-islamic media arm. It is a sad day when you have to turn to RT over the BBC to get the real news.

    Aug 02, 2016 02:51 AM

    The Fibonacci fans are working and the bulls have some work to do in the 52.50 – 53.00 area for GDXJ.

    http://schrts.co/1Xk3hT

    DFS
    Aug 02, 2016 02:01 PM

    GDXJ
    Price Support Pivot Point Resistance
    51.17 49.05 50.53 52.01

    I AGREE

    Aug 02, 2016 02:13 PM

    I’ve said this once and many time before, Wti lower means higher commodity prices and to be more specific gold and silver miners. It’s been a relentless up and up for gold with small periods of dips. From here forward I can now say with great certainty that the scenario I spoke to shad about with gold going higher through summer into 1500/1550 is becoming reality. A meaningful drop should happen from a higher number.

    Good luck to all

    Glen

    P.s Matthew remember the Wti bottom I spoke to you many many months ago regarding a bottom? I believe this recent drop is a double bottom and would be wise for some to buy in soon very soon. With that being said shad or Matt care to share some prospects in the energy sector? You know the trophy quality kind

    Cheers

      DFS
      Aug 02, 2016 02:29 PM

      Dream on Glen. You may be right, but many RSIs are getting close to and above 70 again, which again indicates nothing like a $200 increase in gold price by the end of summer.
      (Unless you’re talking Australian summer)
      But what do I know, I’m not a chartist.

        Aug 02, 2016 02:39 PM

        I being as realistic as possible here! I never said $1500 by end of summer. I’ve been blown away with this move myself but that is what bull markets do if this in fact is a resumption of the bull which started in 1999/2001.

        Don’t shoot the messenger, I just find it fascinating that one of two of my predictions “seems” to becoming true. Again I was more in favour of my original prediction which was a break of below $1000. It never panned out and unless we get Armageddon and a total market and equities collapse, then maybe gold will break below in a deflation environment. I’m willing to roll the dice hear and say gold goes higher “even with a high rsi” as many of us in here already know that bull markets can and have the ability to maintain high rsi and have the masses on the wrong side of the trade. I still get the sense to many people thinking gold down. It has the ability to outperform. If I was to play it extra safe I’d say gold slightly higher into third week of August possibly September and then correction. Regardless gold goes higher imo just before or after elections. The miners will continue trend after dips.

        Aug 02, 2016 02:55 PM

        I don’t see the current RSI as a problem at all. Huge moves often start from above 70. Gold jumped about $130 in 7 sessions in early February when the daily RSI (14) had the same reading that it does today.

        http://schrts.co/Rq9MZ4

      Aug 02, 2016 02:01 PM

      Hey Glenfidish – Yes, I agree that your scenario about Gold bucking the seasonality trend and continuing higher is bullish for the longer term picture, and I responded to you back before this had played out that if we saw that happen, it would be another layer of confirmation that the secular bull market was back in swing. At that time I was thinking just staying in the high $1280’s – $1290’s would be impressive, but likewise, I wasn’t expecting this strong of a sustained move upwards. You were right that we will correct sometime in the Fall, but it will be from a much higher level. Good insights!

      As for prospects in the Energy sector most of my funds for that sector are tied up in Uranium, Lithium, and Renewable energy at present. I’ve considered just grabbing a position in the ETFs (XOP) and (XLE) to get some exposure to Oil explorers and producers, thinking this may be a double bottom for Oil as well. There is still a voice in the back of my mind warning me to be cautious, as this downward leg may take down companies there are hanging on by a thread, and already breathed a sigh of relief when Oil got back up to $50 that they were out of the woods….. I’m still expecting a little more carnage in Oil before I want to get back into individual names, and want to see who gets invited to the “Survivor’s Ball” once this current rout is over.

      Cheers!

        Aug 03, 2016 03:14 AM

        Shad

        Great points! Thanks for sharing some of your exposure. As always best of luck.

    DFS
    Aug 02, 2016 02:19 PM

    Volume is up on junior silver shares today. It will statistically meaningful if it keeps up to close.

    Aug 02, 2016 02:35 PM

    Nice up day in the PM’s

    DFS
    Aug 02, 2016 02:38 PM

    It is particularly noticeable that Canada is making up for lost time after yesterday’s closed markets, with price increases and volume increases in precious metal stocks disproportionately large today.

    DFS
    Aug 02, 2016 02:42 PM

    I wonder if the ESF guys are going to step in and help the general market before the close.

    Aug 02, 2016 02:46 PM

    Just donated to Johnson campain for president. Trump seems to be demonstrating borderline insanity. Dislike Hillary and Bill . I will ticket spilt on the down ballot choices . Everyone should vote. Doing well with food stocks and a small bourbon producer . best of health and wealth to you all S

      Aug 02, 2016 02:06 PM

      russell s hamilton – what small bourbon producer? Are you doing well investing in it or drinking their product ? 🙂

      I’ve considered investing in the Bourbon boom as well. I’ve participated up until now merely as a consumer.

    DFS
    Aug 02, 2016 02:52 PM
    Aug 02, 2016 02:32 PM

    Matthew

    Have you looked the On Balance Volume (OBV) on the weekly gold chart?

    1. Moderate resistance after the $1400 level is broken
    2. Nothing but air between $1480 and $1560 !!

    Other’s predictions of $1500-$1550 by September/October are actually quite possible.

    If gold goes up another $150-200, will the PM juniors double again?

      Aug 02, 2016 02:36 PM

      Agree….1404 ,and look out

      DFS
      Aug 02, 2016 02:23 PM

      I agree possible, but I don’t think probable until after the next correction, which puts the time-line into year end or next year.
      (Unless major bank failure occurs….then all bets are off)

      Aug 02, 2016 02:00 PM

      Brian,

      I would be very surprised if gold doesn’t reach at least 1460 – 1480.

      A lot of juniors will do a lot more than double.

      Impact Silver is now an eleven-bagger from its January low and looks like it’s going into the 1.40s next…

      http://schrts.co/RiYu1I

        Aug 02, 2016 02:01 PM

        I held onto my Claude too long, but did sell and got into Impact Silver late-Feb in the congestion zone (US$0.18-0.20). So I have 5-bagger. Not complaining – I just should have taken your advice earlier (and more often)

        Matthew, you gave us all the information we needed for free. Most people don’t know, but your trading record is remarkable compared to ANY PAID subscription.

        I have a couple stocks with spectacular gains (+400%), most in the 100-200% range, and about 1/3 are duds or new entries in the past month, that I insist on holding. I have limited myself, almost completely, to a couple jurisdictions, too (Canada/US/Mexico). Exceptions are Ireland and Brazil.

        If we do get this last surge to end the Weinstein Phase 1 at around $1500+ gold, I’ll probably sell most of my under performers, wait for a 25% pullback, then buy more of the quality companies.

        If I made ONE mistake in the past 6 months, it was buying into the “Diversify for safety” argument. I should have just added to my original dozen stocks, rather than chasing new possibilities.

        So my top 10 stocks, going forward (The ones I would buy more of after the next significant re-tracement:

        Alexco
        Americas
        Avino
        Impact
        Excellon
        Richmont
        Klondex
        Kirkland Lake Gold
        Integra
        Strategic Metals

        Although I like Pretium, Sabina, Dalradian, they all have their risks

        Cheers,
        Brian

          Aug 02, 2016 02:47 PM

          +10 for your Top 10, + 3 for the other stocks mentioned, and +87 for this line:

          Matthew, you gave us all the information we needed for free. Most people don’t know, but your trading record is remarkable compared to ANY PAID subscription.

          I also should have “taken Matthews advice earlier (and more often)” – as I noted above on the GDXJ chart he posted.

          * Anyway Brian that gives you +100 and an A+ , and you didn’t even have to write a report on the Red Rider Bee bee Gun…. 🙂

          https://www.youtube.com/watch?v=EEedFHxSVSI

    Aug 02, 2016 02:40 PM

    BUY SILVER.

      Aug 02, 2016 02:07 PM

      Silver looking good..up a dollar per month ,you are making a fortune, do not tell the Queen where your hidey hole is located.

        DFS
        Aug 02, 2016 02:26 PM

        QE2 doesn’t need it. She has plenty of gold and silver and land and art, and a few castles (even in London)

          Aug 02, 2016 02:33 PM

          & lots of cash, & expenses from the tax paying plebs that bend down to her…….
          Stupid fecking “PLEBS”.

            Aug 02, 2016 02:21 PM

            IrishTony – We have a mission for you to find $4-$17 Billion in sunken Spanish treasure off the coast of Colombia. Please turn on your Silver homing device……… (see the thread below)

      Aug 02, 2016 02:11 PM

      BUY SILVER Crest metals….!! Now a five bagger!!

    Aug 02, 2016 02:04 PM

    31 Incredible Facts About Gold
    JEFF DESJARDINS on August 2, 2016

    http://www.visualcapitalist.com/31-incredible-facts-about-gold/

      Aug 02, 2016 02:13 PM

      Wouldn’t mind getting a hoist on that Spanish galleon Ex!

        Aug 02, 2016 02:42 PM

        Yeah…. $4 – $17 Billion in Gold, Silver, and Emeralds from the mines of Peru near Colombia. We just may have to take a field trip to go find that Spanish galleon.

          Aug 02, 2016 02:09 PM

          For clarity, the Gold, Silver, and Emeralds are from the mines of Peru, but they are currently near Colombia……just on the bottom of the Ocean……..

          The field trip will involve wetsuits, oxygen tanks, and we’ll also bring along IrishTony for some Leprechaun luck. He’ll find the Silver, that will lead us to the Gold and Emeralds as well…..

            Aug 03, 2016 03:27 AM

            Count me in Ex!! Can Mr Irish swim?

            Aug 03, 2016 03:15 AM

            IrishTony is a magical Leprechaun and so he can swim, breathe underwater, and fly if needed.

            😮

    Aug 03, 2016 03:58 AM

    Please verify Tony!