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Alex Barrow Profile picture
@MacroOps
May 6, 2021 • 10 tweets • 4 min read • Read on X
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On Aug 7th I noted the EXTREME conditions (technical, sentiment, positioning) in gold & made the case for an extended pullback

That take got a TON of flack but ended up marking the top

The reverse is now true. Here's my bull case for $GC_F

1/

2/ Gold has completed a classic bull market correction from extreme overextension. I wrote about this on Sep 23rd where I talked about the historical tendencies of these types of pullbacks, and why gold would continue to sell off.

A screenshot of that report is below.
3/ We've now seen a:
- Peak to trough drawdown of 20% vs avg of 21%
- We're in the 187th trading day of the correction vs
avg of 255 before new highs
- A dip below the $1,700 level
We bought back in on March 31st after completion of the double-bottom
4/ The EXTREMES in sentiment and positioning that we saw over 8-months ago, have not only been reversed but are now showing EXTREME levels of pessimism.

This is what you want to see for a durable bottom to form.
5/ We've seen massive outflows from gold ETFs since December.
6/ The % of miners trading above their 200-day is turning up from DEEPLY oversold levels (sub 20%).

These types of oversold conditions WHILE in an uptrend tend to be powerful buy signals.
7/ Our Precious Metals Extreme Buy/Sell Signal triggered two back-to-back buy signals last month, which has so far marked the bottom.
8/ Silver continues to outperform gold which is exactly what you want to see in a cyclical PM bull market.
9/ PMs tend to be great technical trading markets. They have high fidelity to their setups

The monthly chart in $SI_F is textbook

This is similar to the compression regime I wrote about in March 2019, when we first turned bullish on precious metals.

macro-ops.com/a-golden-macro…
10/ Enduring technical bases can take a while to form & there's still a # of things we need to see fall into place

We're long PMs & will keep building positioning as long as the technicals confirm the thesis

U can read about how we're doing this here 👇
macro-ops.com/the-bull-case-…

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More from @MacroOps

Alex Barrow Profile picture
Apr 17, 2023
The tape and macro conditions continue to be supportive of higher prices over the near term.

BofA’s Bull & Bear Indicator is just a few points from triggering a buy signal... 1/ Image
2/ Our Trend Fragility indicator (a composite of sentiment, positioning, and flows) hit a low of 11% a few weeks ago, which is just 1% away from the 10% needed to trigger a classic buy signal.
3/ Below is one of the Trend Fragility indicator components which shows aggregate index fund flows as a percentage of its 3yr average.

This indicator triggered a buy signal last week. Green dots mark past signals and red dots mark past sell signals. Image
Read 8 tweets
Alex Barrow Profile picture
Mar 27, 2023
My base case is we’re in a primary bear market and we should enter a recession in the latter half of this year, though odds say we should see a continued bullish counter-trend move over the coming weeks... 1/
2/ With that said, looking at charts like those below makes me uneasy about my bearish bent.
3/ In support of our short-term bullish view, here’s a chart of the Russell 3k and the percentage of stocks above their 10 and 50-day moving averages.

Red dots mark instances where both the 10 and 50-day indicators dip below the 20% level, indicating deeply oversold breadth.
Read 7 tweets
Alex Barrow Profile picture
Mar 13, 2023
Sentiment and positioning remain very depressed. Last week’s SIVB freakout likely marks a near-term low.

Market internals (Cyc vs Def, Semis v SPX, etc.) are not leading to the downside. They’re either leading up or trading in line with the market. That’s not bearish... 1/ Image
2/ The Russell chart is broken because of the knee-jerk reaction in financials last week following the SIVB news. It’ll be important to see if IWM can retrace that damage this week.

But Qs and SPX remain constructive as long as they can hold their current levels. Image
3/ Anecdotally, last week I started receiving texts and calls asking about a potential market crash from friends I don’t normally talk markets with. It seems to me that the bearish hysteria doesn’t quite match the tape.
Read 9 tweets
Alex Barrow Profile picture
Feb 27, 2023
The SPX has only two trading days left in the month to see if it can turn its monthly bar around and close in the green. As of now its not looking so good.

Also, the chart is coiling in a tight 10-month range. Compression regimes lead to expansionary ones (aka. Big trends)... /1 Image
2/ We’re fairly neutral in our short-to-intermediate term outlook. So we’ll wait for the market tip its hand on this one. Bonds will be the tell. If they can’t hold a line, then neither will stocks.
3/ It's not all bad though… key internal leads continue to hold up well. Typically we’d see cyclicals, semis, corporate debt, etc… underperform on a relative basis if we are in fact about to start another leg lower. And that’s just not happening, yet. Image
Read 6 tweets
Alex Barrow Profile picture
Feb 21, 2023
Our weekly Nervous & Number Indicator, which is a measure of the relative changes in SPX and the VIX, looks like it’ll trigger a sell signal this week.

Red circles mark past signals... /1 Image
2/ For those who think we’ve started a new cyclical bull market... NOPE.

You don’t have cyclical bottoms when aggregate median valuations are in the 88th percentile and the Fed is still in the midst of its most aggressive hiking cycle in decades: Image
3/ We turned cautious two weeks ago for a number of reasons (short-term extension, significant resistance, yields breaking down, etc…)

Another one of these reasons is seasonality, which is quite negative for the SPX until March 10th. Image
Read 6 tweets
Alex Barrow Profile picture
Feb 6, 2023
SPX is short-term overextended and at resistance (it’s upper weekly Bollinger Band + a significant monthly level that has rejected price since last Spring).

We believe it'll punch through, but we’ll likely see a small pullback or consolidation first, so expect some chop and vol.
2/ Key to watch: Momentum and short-term breadth indicators such as those below. These collectively signaled failed bullish breakouts on each of the last market advances over the past year. They are strong for now, but we’ll have to see how they hold up in the week ahead.
3/ Reminder: Hedge fund positioning remains very light. As the US economy continues to surprise to the upside over the next few months, we’ll see this chart trend up as they chase prices higher = bull fuel.
Read 6 tweets

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