Ray Micaletti

CIO, Relative Sentiment Technologies | Examining the forces that move markets | Free weekly updates: | Not investment advice

[Ray Micaletti @RelSentTech]

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[Ray Micaletti @RelSentTech]

Lots of talk about 2022 following the trajectory of 2008. Maybe so. But in fall 2008 institutions were bearish equities and bullish the dollar, whereas now they are bullish equities and bearish the dollar. Let's see what happens.

[Ray Micaletti @RelSentTech]

@DBclouds99 Low-53s is the thanksgiving gap in silver futures.

[Ray Micaletti @RelSentTech]

@DBclouds99 Won’t be certain until next Friday but tomorrow might tell us enough to have conviction either way. Personally, I lean toward smart money buying this dip and retail puking. We’ll see.

[Ray Micaletti @RelSentTech]

@DBclouds99 I wouldn't be surprised to see an explosive bounce off $54, where silver gapped above on Thanksgiving night if I recall correctly.

[Ray Micaletti @RelSentTech]

This and next week's reports will be interesting because silver plummeted post CPI and again today, after positioning had already moved up 0.7 z-scores prior to CPI. I think there's a decent chance positioning could be turning bullish. If not, then we are probably going to the 40s or worse!

[Ray Micaletti @RelSentTech]

@DBclouds99 @Macrobysunil @MI_Investments Will be interesting to see next Friday whether retail kept stacking through this shellacking. If so…🤯

[Ray Micaletti @RelSentTech]

Ascending triangle in the gold-to-silver ratio does not bode well for metals in general and silver in particular.

[Ray Micaletti @RelSentTech]

I was just about to note that, while Monday's big selloff didn't seem that it would move the needle on positioning, today's head-fake-higher-then-collapse might, simply because the miners are positive on the day, silver is making a lower interim low while its RSI is making higher lows, and silver is clinging to the lower rail of its near-term trend channel (and it and gold are forming megaphone patterns on the 30-min chart, currently at the bottom of the megaphone). I could see a slingshot move higher (not necessarily expecting it, but wouldn't shock me) and the potential for positioning to have gotten more favorable.

[Ray Micaletti @RelSentTech]

There doesn't seem to be anything special about this dump that would cause the positioning balance to shift (compared to all the others we've seen the past 4-5 months). My current view is that if nothing changes with the dollar and its relative sentiment turns bearish in late October, that would be the timetable for positioning to shift--if it's going to--in precious metals. And that would likely involve an immensely painful October for PMs, to convince retail that their dream of $150+ silver is over.

Yields are surging. If policymakers move to cap them (or market senses that might happen) then PMs might preempt a bad October. Otherwise, positioning is just too retail-bullish for them to gain traction, in my view.

[Ray Micaletti @RelSentTech]

@DBclouds99 @1ChartMaster 👀

[Ray Micaletti @RelSentTech]

From a positioning perspective, precious metals particularly like bullish relative positioning in the yen (speculators more bullish than retail). That's the current state of affairs--but as I have been saying in the weekly commentary, that's the *only* bullish positioning factor for PMs right now, all others are bearish, and historically when only the yen has been bullish, PMs have gone largely sideways--that's actually notable because with no bullish factors they go straight down. So, the yen is doing some heavy lifting to keep PMs mildly afloat.

From a macro perspective, it's fuzzy. A weaker yen tends to mean a stronger dollar--not good for PMs--but if a weaker yen coincides with JGB rates rising, that was good for PMs during their epic run last year. Hard to say definitively. The U.S. interventions (yen, Treasuries) seem very PM-positive.

[Ray Micaletti @RelSentTech]

@DBclouds99 @CyclesFan 👀

[Ray Micaletti @RelSentTech]

@badcharts1 CRB Index

[Ray Micaletti @RelSentTech]

@DBclouds99 @alphaticaio So much volume traded hands in silver during the 10am candle that it will be interesting to see if that changes the positioning landscape on next week's read.

[Ray Micaletti @RelSentTech]

@NoWayOutcast 😯

[Ray Micaletti @RelSentTech]

Smart money sold gold again even though gold had moved lower. They bought silver, but not materially, given that it had fallen from 63 to 56 over the period the report covered (I would have expected more buying). Disappointing if you're a PM bull. To get that needed buying thrust from institutions to change the landscape, silver/gold probably have to take another leg down and put the fear of God in retail.

[Ray Micaletti @RelSentTech]

@DBclouds99 @alphaticaio COT delayed until Monday afternoon unfortunately. If anything of consequence I’ll tweet it.

[Ray Micaletti @RelSentTech]

My lean is that it's close to bottoming. Positioning turns bullish this week (Friday) and that regime will be in effect until at least the end of July.

As of this Friday, Smart Money will be bearish the dollar, bullish the euro and the pound, and bullish some exotic commodities that have strongly predicted silver for 30+ years.

Given the strength of the decline in silver the past few weeks, I'd be shocked if retail didn't get less long and Smart Money less short when the new data comes out this week--making the relative positioning more bullish.

On top of that, the selling will have to dry up at some point. Positioning has been bearish since about 81 silver in mid-April, now down 20%.

Maybe we go to the 50s in silver, not far away at the rate it's been moving, but there will be a capitulation at some point.

[Ray Micaletti @RelSentTech]

They don't, but historically they have done pretty well when positioning has been in the configuration it will assume next week. Maybe one more week of bearishness....

Could be wrong, but I think the violence of the move down is an indication of institutions trying to separate retail from their long positions, so they don't partake in the coming renaissance.

Also, when you get bearish on PMs, Dan.... :-)

[Ray Micaletti @RelSentTech]

Big selloff today, but the Smart Money was buying equities this week (S&P, Nasdaq, Russell) and buying the euro and pound. They even took extremely bearish positioning in assets that predict precious metals and turned those positions moderately bullish for PMs.

Let's see what happens with equities and PMs in the coming days/weeks.