A few days ago, we put a spotlight on silver after it had broken out higher through its 75-day moving average for the first time in 8 ½ months. Yesterday, PSLV (Sprott Physical Silver Trust) was up 5.3% as the S&P 500 (SPX) dropped 24 points or 1.4%. Precious metals climbed as stocks sold off. Silver has been pounded this year falling 44%. It is oversold, relative to the market and relative to gold. We continue to think, PSLV has room to go.
We publish our Delta Market Sentiment Indicator each week. It is also published in Barron’s. We think it is one of the best measures of broad market health. This week it is 66.9% down from 72% last week – the market health is deteriorating but is still bullish. Above 50%, the market is bullish and below 50%, the market is bearish. We like to say, “We haven’t seen a lot of people lose a lot of money in a bullish market and we haven’t seen a lot of people lose a lot of money in a bearish market. So, you just have to know whether the market is bullish or bearish.”
In addition to our MSI, we look at many other numbers to help us with entry and exit points of monies being added or subtracted. On a short-term basis, we like to watch the outer edges of the 10-day moving average. On yesterday’s close, 20% of the stocks were above their 10dma (10% or below the market is oversold). There have only been a few times this year when the 10dma has gotten below 20%. If one has been looking for an entry point into this bull market, this might be one of the best times.