Gold in Focus Ahead of Jobs Report
Last week, traders were squarely focused on the progress of the GOP tax bill.
But this week, it feels like everyone's watching Bitcoin so much that the world's forgotten about the stock market!
In fact, look at what's #2 in the Apple App Store:
It's Coinbase — the app for the popular digital currency market place! Yes, a Bitcoin app is pulling more downloads than Instagram and Facebook!
With the November jobs report on the way this morning, let's dig in and see how how bullish traders are feeling about the forgotten stock market ahead of the weekend.
(click here for a primer on the sentiment indicators below)
1) VIX Spread – Bullish
On Friday morning ahead of the November nonfarm payrolls report, the VIX was at 9.97, the first sub-10 reading since November 29.
This gives us a 3-month spread at 4.36, indicating that traders are very bullish.
(click here for a primer on the VIX spread)
2) CNN Fear & Greed Index – Neutral
The Fear & Greed Index is 60, dowm from 73 last week.
This index operates on a 0-100 scale, so a reading of 60 is basically neutral.
3) AAII Sentiment – Neutral
The latest AAII Sentiment Survey shows that 36.9% of individual investors are bullish. This is basically flat from last week's 35.9+% reading, but it's still way off the 45.1% level from 4 weeks ago, which itself was the highest since since January 5, 2017.
The long-term average is 38.5%, so a reading of 36.9% is basically neutral.
4) CBOE Equity Put-Call – Bullish
The CBOE Equity-Put Call ratio's latest reading is 0.58. This is below the 0.655 long-term average.
The 10-day moving average is 0.581, which is very low on a historical basis.
And the 3-day moving average, which I use to measure very short-term bullishness, is 0.607.
These numbers point to bullishness among options investors, who seem to expect a snap back to all-time highs in the SPX.
ConclusionOut of 4 sentiment indicators, we have:
- 2 neutral (down from 3 last week)
- 1 neutral (up from 1 last week)
- 0 bearish (flat from last we)
Here's what I said last week:
The permabears are still saying that everone's all-in bullish and 100% complacent… and they're right.
If the bulls rush to the exits, they may face some trouble — there's an awful lot of them, and only so many can fit through the door at once…
Sentiment was very bullish last week, but it's clearly cooled down this week.
Judging by the VIX and the CBOE equity put-call, options traders see almost no volatility ahead — and a lot of upside potential.
But when we mix in our data from the CNN Fear & Greed Index and the AAII sentiment survey, we a more nuanced picture.
Market momentum has slowed, and individual investors are definitely in neutral territory.
So clearly, traders are back in the “moderately bullish” camp.
That's not exciting to say, but it's the truth.
The big question now is what impact the jobs report will have on equities.
I'm mostly interested in gold.
Gold's taken a big spanking, at least partially because Bitcoin has suddenly attracted a mountain of investor dollars.
If we get a weak jobs report, gold could skyrocket, so keep an eye on it
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