Tags: gold | stocks | risk | reward

Sentiment Changing on Many Fronts

By    |   Tuesday, 28 Jan 2014 06:51 AM

With the stock market coming under some selling pressure these last few weeks and the earnings reports failing to impress thus far, we have seen some changes in the sentiment readings from several different asset classes.

First, the extreme bullish readings toward stocks have dipped slightly, but they have a long way to go before reaching a bearish skew.

The AAII Sentiment Survey ratio dropped to 1.6, and the four-week moving average dropped to 1.66. Historically when the moving average moves above 2.0, you worry about excessive optimism.

The 21-day moving average on the CBOE Equity Put/Call ratio finally moved up a little and moved back above the 0.54 level for the first time in 17 days.

While the sentiment indicators for stocks are falling from their bullish extremes, the opposite is happening with gold.

The latest Commitment of Traders report shows that the large speculator group has been adding to their bullish bets during the last five weeks, after reaching a pretty significant low back in early December.

Gold has been on the rise since late November when I wrote Gold Looks Good From a Risk-Reward Analysis. Friday saw the metal hit a two-month high before slipping a little on Monday.

While the sentiment readings are changing, I still like gold better than stocks right now from a risk-reward standpoint.

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With the stock market coming under some selling pressure these last few weeks and the earnings reports failing to impress thus far, we have seen some changes in the sentiment readings from several different asset classes.
gold,stocks,risk,reward
222
2014-51-28
Tuesday, 28 Jan 2014 06:51 AM
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