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Mark Hulbert
Aug. 18, 2010, 12:01 a.m. EDT · Recommend (5) · Post:
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By Mark Hulbert, MarketWatch
ANNANDALE, Va. (MarketWatch) -- Gold market enthusiasm has returned in force over the last couple of weeks, as bullion has reached a six-week high.
( Read full story on gold's recent strength.)
Unfortunately, this enthusiasm could prove to be a problem for gold in the not-too-distant future.
For now, though, the resurgence of this enthusiasm is not enough to cause contrarians to throw in the towel on gold's short-term trend. A short-term sell signal would be forthcoming from contrarians only if gold-market excitement were to continue jumping in coming sessions.
In any case, the current sentiment foundation does not appear to be a strong enough foundation to support gold making a major move right away into new all-time high territory.
I base these comments on current gold market sentiment, as indicated by the average recommended gold market exposure among a subset of short-term gold market timers tracked by the Hulbert Financial Digest (as measured by the Hulbert Gold Newsletter Sentiment Index, or HGNSI). This sentiment benchmark currently stands at 44.9%.
As recently as the beginning of this month, in contrast, the HGNSI stood at just 9.2%. So while the rally in recent weeks started out climbing a very strong wall of worry, in the process that wall has become markedly less robust.
To be sure, bullish sentiment is not yet so high as to be triggering immediate short-term sell signals. The HGNSI remains well below the 61% level to which it rose in January, or the 68% level to which it rose last December. And since gold bullion on both of those prior occasions was well below where it stands now, we know that a wall of worry still exists out there to some extent.
The most bullish thing that could happen right now for gold, from a contrarian point of view, would be for bullion to pull back a bit and for gold timers to react by beating a hasty path to the exits. In that event, contrarians very well could then be forecasting an imminent major gold move into new high territory.
The most bearish thing, in contrast, would be for gold enthusiasm to give way to even more excitement and then outright euphoria. That could very well happen in just the next few days, should gold continue to rise at the rate it has in recent sessions.
In that event, watch out below.
Stay tuned.
Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.
Mark Hulbert is editor of the Hulbert Financial Digest, which since 1980 has been tracking the performance of hundreds of investment advisors. The HFD became a service of MarketWatch in April 2002. In addition to being a Senior Columnist for MarketWatch, Hulbert writes a monthly column for Barron's.com and a column on investment strategies for the Journal of the American Association of Individual Investors. A frequent guest on television and radio shows, you may have seen Hulbert on CNBC, Wall Street Week, or ABC's World News This Morning. Most recently, Dow Jones and MarketWatch launched a new weekly newsletter based on Hulbert's research, entitled Hulbert on Markets: What's Working Now.
Target Corp., fresh from a makeover, is still dealing with the same old headwinds.
12:06 p.m. Today12:06 p.m. Aug. 18, 2010 | Comments: 3
- kurtzken21 | 11:18 p.m. Aug. 17, 2010
"Mark Hulbert: A contrarian take on gold http://on.mktw.net/cIh8xQ" 11:41 p.m. EDT, Aug. 17, 2010 from MktwHulbert
"Mark Hulbert: Looking to year 3 of presidential cycle http://on.mktw.net/cDLXR8" 11:44 p.m. EDT, Aug. 5, 2010 from MktwHulbert
"Mark Hulbert: How Congress' recess affects markets http://on.mktw.net/dsa604" 12:15 a.m. EDT, Aug. 4, 2010 from MktwHulbert
"Mark Hulbert: Wall of worry weaker after big rally http://on.mktw.net/aNRQvp" 11:53 p.m. EDT, Aug. 2, 2010 from MktwHulbert
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