Weekly Recap & Outlook – 04.19.13

Tower Private Advisors


  • Correction? What correction?

I’m doing this post from home, laboring without the use of Bloomberg, thus making this week’s effort worth even less than usual.

Capital Markets Recap


You call this a correction?


It hardly qualifies, but look what happened to the sentiment expressed in the weekly survey of American Association of Individual Investors attitudes. This is what the fine folks at Strategas referred to as “fragile sentiment.” Fragile, indeed. That’s the lowest percentage of bulls since the market’s bottom in early 2009. This survey isn’t the most robust, but it certainly shows a shattered psyche by a portion of the investing public.

aaii bulls

On a monthly chart, there’s virtually no indication of any sort of correction.


Amongst the ten S&P 500 sectors, however, there are four that are certainly correcting, the four most cyclical group, as shown below. Click for a ginormous chart.


Now here’s a correction, and if corrections are–as some are wont to call them–healthy, then you ought to feel better about buying gold. Do you? I’m guessing you’d rather buy stocks. The volume on the big day, as I’ve indicated below, was the largest ever in the fund’s history. That’s capitulation, at least by retail investors. The rebound from that low looks pretty bullish, but on ever lower volume, which makes the advance a little suspect. And that orange square, that marks the price gap. That’ll serve as stout resistance, although this is not the commodity, but the ETF that represents it. Still, the next $20 move in the ETF (~$200 in the metal, itself) won’t be an easy one.


 This week, the CFA Smartbried posed a question to its readers, “What is the primary factor bringing the price of gold to its recent sell-off level of $1,400?” Here are the responses. I’ve underlined mine.


Graig P. Stettner, CFA, CMT
Chief Investment Officer
Tower Private Advisors






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