Bob Moriarty: We Are At An Extreme Of Emotion Right Now In Global Stock Markets

Bob Moriarty: We Are At An Extreme Of Emotion Right Now In Global Stock Markets by for Energy and Gold

Bob Moriarty, founder of 321gold, is not one to be shy about what he thinks. In this month’s conversation Bob lays out why he thinks global equity indices are on the verge of rolling over after reaching a bullish sentiment extreme. We also delve into the Miramont mess of a couple weeks ago and why he is still a shareholder despite being very unhappy with Miramont CEO Bill Pincus. Bob also delves into why many self-proclaimed gurus make investment information and analysis more complicated than it needs to be. Without further ado here is Energy & Gold’s April 2019 conversation with Bob Moriarty…

 

Goldfinger: A lot has happened since the last time we spoke. Gold has dipped about $50, palladium dropped about $200, meanwhile the stock market has continued cruising higher and the S&P 500 is now at its highest levels since last October. In your estimation what is the most interesting thing happening out there right now?

Bob Moriarty: We are at an extreme of emotion right now in global stock markets. Sentiment has once again become overheated and I expect that a large decline will begin in the next few weeks. I also expect gold to rise as stock market indexes fall.

Goldfinger: There sure are a lot of bulls out there suddenly and the Barron’s cover story (“This Bull Market Has No Expiration Date”) over the weekend helped to illustrate just how optimistic market participants seem to have become. Can sentiment get even more extreme?

Bob Moriarty: That’s a really good question and one that I should cover. I wrote a piece on January 26th, 2018 where I pointed out that nearly a dozen commodities and stock indexes (including the S&P 500) had reached an extreme of emotions and were about to turn lower. In fact, they began to turn that day and entered into a sharp correction that lasted for a couple of weeks. On December 24th of 2018 I wrote another piece titled “Sentiment Says Turn, Turn, Turn” and I think there were 9 different futures markets that I talked about including the S&P 500, T-Bonds, crude oil, and gasoline. The Daily Sentiment Index (DSI) for all of the markets mentioned in the article had reached extremes in the prior week and on the 24th things were ready for a big turn. Markets were closed on the 25th for Christmas Day but when they reopened on the 26th we saw major bottoms in the S&P, copper, crude oil, etc.

As of Friday’s close the sentiment (DSI) for the S&P and Nasdaq is at 91 and the DSI for the Nikkei is 93. Now those are not turning points but they’re very high readings that tells me a turning point is coming shortly. If the DSI for the S&P or Nasdaq hit 95 shortly I would say “ok, this is it. Time to sell!” – if you’re a contrarian you probably want to see a big rise in stocks this week that will create a sentiment extreme which will likely be followed by a sharp correction or even a crash.

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