![]() Red plus (minus) signs to the right of specific forecasts indicate those graded right (wrong) based on subsequent market behavior, while red zeros denote any complex forecasts graded both right and wrong. Grading takes into account more detailed market behavior when appropriate. He is the author of multiple books related to the Elliott wave principle. The table below quotes forecast highlights from the cited source and shows the performance of the S&P 500 Index over various numbers of trading days after the publication date for each item. Robert Prechter is president of Elliott Wave International and has since 1979 been publishing the Elliott Wave Theorist. Evaluated predictions come indirectly via MarketWatch columns, which have tracked his commentary only occasionally in recent years. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited.We evaluate here the stock market forecasts of Robert Prechter, mostly since April 2002. Mark Hulbert is a regular contributor to MarketWatch. Nevertheless, contrarians won't be surprised if gold declines more in coming weeks. And even when it does, it only sheds light on the market's near-term direction. In any case, however, the usual qualifications apply: Contrarian analysis doesn't always work. ![]() Gold did not slide on all such occasions, especially not as much as it did earlier this week. Just consider the numerous other occasions over the last two years in which there was apparently good news on the trade front. Sentiment might not have anything to do with the drop.Ĭontrarians' response is not that excessive bullishness causes a drop but that it creates the preconditions in which a drop is more likely. Bullion's drop this week, for example, appears to be in reaction to good news on the trade front between the U.S. You might object to this analysis by arguing that gold's price is affected by myriad factors other than sentiment. But it still is negative: The GDX on average over the past two decades has declined following readings as high or higher than they are currently. To be sure, with the HGNSI currently lower than this upper threshold, the outlook isn't as negative as suggested by the declining bars in the accompanying chart. That's equivalent on an annualized basis to a spread of more than 30 percentage points. As you can see, the spread between this ETF's average return 3-month returns following these high and low thresholds is ten percentage points. The difference in subsequent returns following those thresholds is illustrated in the accompanying chart for the VanEck Vectors Gold Miners ETF. Those thresholds are at the minus 23.3% and plus 66.5% levels. In each case, the benchmarks produced significantly higher returns following the 5% of the lowest HGNSI readings than following the 5% that were highest. How low must gold go? To find out, I entered into my PC's statistical software the HGNSI's daily values back to 2000, along with the prices for various benchmarks for the performance of gold mining shares (such as the PHLX Gold/Silver Index, the VanEck Vectors Gold Miners ETF, and the VanEck Vectors Junior Gold Miners ETF. ![]() This latest reading is at the 71st percentile of all daily readings since 2000.Ĭontrarians therefore believe that gold will have to decline even further before bullish sentiment recedes sufficiently to create a short-term buying opportunity. It got as high as 64.6% earlier this month, before dropping back this week to 43.8%. This average stood at 56.3% when I wrote my early-September column on gold market sentiment. This average exposure level is what is measured by my Hulbert Gold Newsletter Sentiment Index (HGNSI). In fact, it still is higher than 70% of all daily readings since 2000. Though the average recommended gold market exposure level among gold timers has retreated somewhat this week, it remains elevated. Unfortunately, gold-market sentiment is only marginally better today than it was when I wrote about it before. VanEck Vectors Gold Miners ETF for example, is 15% today lower than where it stood in early September. The shares of gold mining companies have been hit particularly hard. Gold prices were down more than 1.5% in trading on Thursday, building on earlier losses.Īll told, bullion is now almost $100 lower than where it stood two months ago, when I argued that excessive optimism among the gold timers meant that gold's near-term direction was down. The gold market's exuberance is catching up with the yellow metal. Worst isn't over, as gold timers are still excessively bullish.
0 Comments
Leave a Reply. |