In January 2020, I wrote an article to you that suggested to sell the SP500 and buy gold and gold mines.
The US equity market plunged sharply thereafter (March), mining stocks too and gold briefly. Today, after the huge rebound in the American market from the lows, what is the situation?
- The SP500 is at – 4.1% (after a collapse of -35%)
- Mining stocks (GDX) are at + 14.2%
- Gold is + 7.9%
Sometimes graphics speak more than words. Below find 3 graphics that are really scary for those who remain invested in the SP500.
The Put / Call ratio is at the lowest of the lowest
Many of the stocks in the SP500 have an RSI above 70 ( overbought level), the number of stocks above their 50-day moving averages is at its highest in 20 years and it is the biggest upward rally in the market. ‘history.
Small traders bought calls like never before (very bad sign for a continuation of the rise)
This last graph makes me think of the abbreviation FOMO (Fear of Missing Opportunity) which is the fact of buying at any price for fear of missing the increase.