Smart Money / Dumb Money Spread Goes Negative As Gold Falls

This is an abridged version of our Daily Report.

Spread between Smart/Dumb Money shrinks

The spread between Smart Money and Dumb Money Confidence is negative for the first time in months.

By the time it has inverted after other long periods above zero, stocks struggled short-term but not long-term. The only real failure was in 2008, and a loss of more than 3% in the coming weeks would be a warning sign.

Gold slips into a downtrend

For the first time this year, gold futures closed below their long-term 200-day average. After the end of other long streaks above average, gold was weak in the shorter-term but did fine longer-term. It’s also entering a seasonal weak spot with sentiment that already rebounded from pessimism.

Coffee is hated again

After seeing its Optimism Index rebound to neutral territory, sentiment toward coffee has soured quickly and it’s back to the excessive pessimism threshold.

Mexico is hated, too

The 10-day average of the Optimism Index for the iShares MSCI Mexico ETF (EWW) should decline below 20 after Tuesday’s selling pressure.