Gold and Gold Stocks Still Our Most Negative
By far, the gold and gold stocks indicators are our most bearish indicators right now.
Our gold stocks indicator has actually become even more bearish, and our VanEck Vectors Gold Miners ETF (GDX) December 23 put is still a “buy” for readers who may have missed the original Trade Alert.
Our bond indicator remains slightly bullish. Inflation expectations, which jumped after the November election, have tapered off a little recently as it now appears unlikely that President Trump’s economic promises—which implied faster growth and higher inflation—will be implemented anytime soon. The bond market has performed pretty well this month, affirmed by our bond indicator’s positive reading lately.
Our dollar indicator has retreated over the past week into neutral territory, while our oil and oil stocks indicators are still “-1.” The latter two were actually right on the borderline between “0” and “-1” last week, but this week they are firmly in “-1” territory, though still not at “-2.” Stocks meanwhile, remain neutral, without strong bias one way or another.
We have remained disciplined and required a strong signal threshold before pulling the trigger on trades. The discipline has paid off in strong trading results, but it also resulted in a relatively small number of trades. We are exploring ways of adjusting our indicator signal criteria to produce more tradeable signals. Stay tuned.
| Indicator | Rating |
| Bonds | +1 |
| Gold | -2 |
| Gold Stocks | -2 |
| Oil | -1 |
| Oil Stocks | -1 |
| Silver | -1 |
| Stocks | 0 |
| U.S. Dollar | 0 |
Stock Talk
Fo
I’m new to this service so please excuse a neophyte question. I couldn’t find new-member material giving more color on the table of Indicators and Ratings. Can anyone respond with how often the table is published, its scale of values (-2 to +2 ?) and their meanings, and how far out the ratings tend to look.
Also, it would be useful to know what factors/information go in to generating the ratings, the “how the sausage is made” question, basically.
I hope the questions are not out line, too aggressive, or make me look the fool.
I’ve been at Investing Daily for about 2/3 of a year, first with OFI and PF, adding VT a few months ago, and now with the whole fire hose open as a freshly minted WS subscriber.
Scott Chan
Hi Fo,
Welcome to the service!
Steve updates his indicators everyday. We publish updated indicator signals in the table at least once a week, and if there are unusual actionable changes, more often.
In order to keep things simple, he created a five-value system ranging from -2 to +2 to show how bullish or bearish his various indicators are. He has assigned each of the five values to a specific range in his underlying indicator data.
Long story short, -2 would be very bearish, 0 would be neutral, and +2 would be very bullish. -1 and +1 would be slightly bearish and slightly bullish respectively. For Dr. Leeb to recommend a new option trade, he requires that the indicator be either +2 or -2.
As far as how the indicator signals are derived, Dr. Leeb maintains spreadsheets with millions of pieces of data and variables. He performs statistical analysis in a way to simplify the relationships between the variables.
For example, if you had 20 variables, the typical way quantitative analysis works — and this includes most companies that use quantitative analysis — is it would examine 2 to the power of 20 relations. It’s an overwhelming number of calculations that over optimize predictions. The way Dr. Leeb tries to do is to reduce the analysis down to 20 relations which appeals to common sense and simply, works. It is similar to facial recognition algorithms in that irrelevant data is ignored or eliminated.
I will leave it to Steve to explain the indicators in a more eloquent way in the future.
Fo
Scott, thank you very much for the useful and well-penned reply.
Twenty relations instead of 1 million plus is definitely a nice reduction!
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