Gold, Ready …. or Not?

March 8, 2020

Weekly Market Outlook

By Keith Schneider

blankEquity markets digested last week's dead cat bounce and closed virtually unchanged as the virus takes in toll in both a rising body count and economically.

Despite the neutral close for the week, the most important indicator is a new one called the TPI (Toilet Paper Indicator) and it is still calling for a s**t storm. People are hoarding supplies and in some place’s toilet paper is sold out.

Until this panic flushes itself and toilet paper re-appears on shelves, markets will remain under pressure. Considering historic lows in rates, Gold could be ready to head to all-time highs.


This week’s highlights are:

  • Risk Gauges are deeply in risk-off mode and worsening
  • Utilities and Consumer Staples reversed last week’s selloff and regained strength (confirming risk-off)
  • Growth stocks and Semi’s refuse to give up leadership which is surprising and bullish
  • Big Caps firmed (DIA) on a relative basis which could be a positive if it can hold
  • Brother Biotech (IBB) is holding firm and should lead when a rally occurs
  • Market Internals and Sentiment are both still in risk-off mode
  • Longer-term advance/decline line has broken down thru a critical trendline
  • Volume is showing major institutional selling across all key benchmarks
  • Volatility (VXX) exploded and held firm
  • Longer-term advance/decline line has broken a critical trendline
  • US Long Bonds and interest rates in general hit lifetime lows showing deep panic and concern
  • Gold is at a key long-term inflection point

On a final note, if you are not comfortable relying on the TPI which is not exactly based on stats, our quant-based trading models which are based on exploitable edges have been doing outstanding with our Alpha Rotation model (without the use of leverage) up over 17% YTD, and our conservative and aggressive Alpha Options models are up 50% and 80% respectively even with a comfortable cash position of as much as 85%.

Best Wishes for your trading,

Keith Schneider

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