With central banks around the world unleashing waves of liquidity, there have been heightened concerns that one result will be a decline in the purchasing power of our money.  For that reason, a number of investors have been flocking to gold. Even before the COVID-19 crisis, gold prices had been in a solid uptrend, and while prices spiked as the crisis first began, they couldn’t quite get above the $1,650 – $1,700 range.  In mid-March even, prices plummeted with just about every other financial asset before quickly recovering.  Once again, though, the rally stalled at resistance.  This time around, though, the 50-day moving average was strong enough to provide support and after that test, gold finally got the long-awaited breakout that investors had been waiting for.

Gold’s price spiked as high as $1,787 per ounce in mid-April before running out of momentum.  When a stock or commodity breaks out above resistance to new highs and then pulls back, the former resistance level should act as support, and that is exactly what we saw this time around.  This week, gold bounced right on cue at around $1,700 and has since rallied 2.6%.  With the first test of support proving successful, look for gold to now establish a new range with a floor at around $1,700.  At least that’s what the technical analysis textbooks would say.  Start a two-week free trial to Bespoke Institutional for access to our entire suite of market research and commentary.

Heading into today’s session, the S&P 500 was little changed over the past week. But even if equity prices are not reflecting it, the decimation of the crude oil market has put a dent in investor sentiment.  In this week’s AAII survey, only 24.86% of investors responded as bullish.  That is the lowest level of bullish sentiment since the COVID-19 outbreak began! The last time the bullish reading was this low or lower was on October 10th when it was 20.31%.  The 10 percentage point decline from last week’s reading of 34.86% was also the largest weekly decline since February 27th.

Whereas bullish sentiment fell, bearish sentiment rose to 50%.  This is the first time since the final week of March that at least half of respondents reported as bearish, and it was the biggest jump in bullish sentiment since March 12th. The inverse moves of bullish and bearish sentiment this week has also sent the bull-bear spread to its widest level in favor of bears since last August. Today, the bull-bear spread is at -25.14. At its widest level back in early August is was slightly wider at -26.54. This week also marked the first time since April of 2013 that bearish sentiment doubled bullish sentiment.

Recently, neutral sentiment has been extremely muted. At its low in mid-March, neutral sentiment was only at 14.5%.  Every week since then, neutral sentiment has ground higher reaching over 25% this week for the first time since late February.  Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

A massive number of people continue to file jobless claims with another 4.427 million initial jobless claims coming in this week.  Similar to last week, the good news is that was less than forecasts of 4.5 million and the 4.427 million number is a drop from the 5.237 million last week. In fact, that 810K decline is the second largest on record behind last week’s 1.378 million drop. Additionally, this week was the lowest print since the first claims number above 1 million for the week of March 20th.  The bad news is that regardless of the somewhat slowed pace on initial jobless claims, the numbers remain at historically unprecedented levels.

Before seasonal adjustment, this week saw 4.267 million claims filed compared to 4.965 million last week.  Again, while that number is still extremely high, the past two weeks have marked a significant deceleration.

While the level of claims are off of their records from a few weeks ago, the moving average put in a new record high today.  The moving average has continued to grind higher reaching 5.786 million.  Granted, that 280K increase from last week was the smallest since the surge in claims began in late March.

As previously mentioned, the pace of initial jobless claims have slowed for the time being, but that does not take away from the massive number of people reporting as jobless.  In total, since the beginning of March, just under 27 million Americans, or roughly 8% of the population, have filed initial jobless claims (seasonally adjusted).  Although they are released with a one week lag to initial jobless claims, continuing claims this week printed at their highest level on record at 15.976 million.  Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.