I enjoy watching CNBC during the trading day. I grant you, most of the time the mute is on. The one time of the day when I keep the mute off, however, is from just before the closing bell and through "Fast Money."
You might wonder why I do this. I do it because I like to hear the sentiment of the trading day. I think it gives a good idea of what folks deemed important to discuss from the trading day. Did they fuss over this or that? Or did they ignore it? And if they fuss too much, we can tend to get a sentiment tell. Or I suppose if they don't fuss enough, or not at all, that too can be a tell.
So you can imagine my surprise -- my shock? -- that there was hardly a second spent on the decline in gold on Monday. I mean, I imagined for sure there would be a segment discussing the breakdown. Because that was a breakdown in the SPDR Gold Shares fund (GLD) on Monday (blue line). And it wasn't small, since it was to the tune of almost 2%.
Ever since that peak in early August when the Daily Sentiment Index (DSI) reached 90, I have shied away from gold. You might recall back a couple months ago, when asked about GLD, I said there was a measured target around $170-$172 on this exchange-traded fund. Due to that gap up, that left an island a few weeks ago I might have to expand the target down to $168-$169, but that's the range. You can see there is a gap that gets filled around $170, as well.
It has been my contention that a break of that $175 area would bring out the bears and that the CNBC crew hardly mentioned it is surprising as is that the DSI is only 30. I expect GLD to attempt a rally from this area, but I want to see some more hysteria before diving in. I suspect in the coming days we may get some hysteria, now that the price is getting into the range.
Another surprise for me was the DSI for the Volatility Index went up not down. I do not know the methodology for the DSI (it is proprietary) but I can guess that it's because the VIX has been in the same range for nearly two weeks. Had it broken down we might have seen the DSI move to single digits.
Yet on the sentiment side of things we did see folks getting quite happy for the first time in over a month. The put/call ratio fell to .67, which is the lowest since Oct. 12. That was a peak in the S&P.
I had thought the DSI for the VIX would go to single digits, but it did not. Yet, the put/call ratio is getting dangerously low. The holiday week may keep the market elevated, but I wouldn't count on it. Keep in mind that breadth is good so that's not an issue. The issue is sentiment is getting carried away. I mean, when CNBC fails to mention gold, in favor of energy, that says something, too.