Put/Call Ratio Surges To Highest Since May 2012

The various interpretations of put/call ratios are as diverse as the number of traders who view them. Typically they are used contrarian-wise, a high Put/Call ratio signals an over-cautious investor universe and thus is bullish (and vice versa) but in recent years that has been much less evident. Currently, the index-based put/call ratio is at 1.80 - the highest since May 2012, having been notably above 1 (i.e. more puts than calls) for most of the days since the Bullard lows.

Put/call ratio (rebased around 1 for clarity) is at its highest since May 2012...

Of course, there is one difference now... no QE (in the USA)

Chart: Bloomberg

The Longest Streak In Stock Market History... Is Over

For 29 days - off the Bullard lows - the S&P 500 closed above its 5-day moving average. As MKM's Jonathan Krinsky noted last week, this is the longest streak of sustained equity momentum higher in the history of US markets (surpassing the previous record 27 days from 1928). Today (well techncially Friday's early close) saw that streak come to an abrupt end...

The outcome post a reversal is mixed:

Nickel hopes to be stable soon

Since the year 2005, nickel has been destructed as well as declining from the heights, the sudden and intense decline in the value of the metal, has caused massive closure of  nickel mines, which in turn lead to large scale unemployment. The main reason behind the fall of nickel price was the decline in the demand for stainless steel, and also the growth in the demand for plain steel used in construction.

According to the IBIS World, the price of nickel had reached to the  highest points of  unknown heights after the financial crisis, and also shattered due to the lack of economical development all over the world, in the following years.

According to the forecasts there are chances that the future of nickel could be better, but best is not an option. In the month of May, this year, the value of nickel reached a two year high, but the condition of the metal has been worsening since then as it soon declined to 25 percent lower.

The reason for the hike in the price was the sudden ban of Indonesia, on the export of unprocessed nickel, which increased the price of the metal by 56 percent at that time.  But the gain was suddenly turned to decline, when other nickel producers filled the hole created by Indonesia, with the supply of nickel which was more than required.

China's Lead Conc. Imports Hold High in Oct. on Higher TCs, Improved Market Fundamentals

China imported 176,600 tonnes of lead concentrate in October, holding high at the second highest this year, albeit a 13.01% drop from September, China Customs data indicate.

Lead concentrate supply in China has been tight this year, turning lead smelters to overseas market. 

The National Bureau of Statistics reported a 9.27% decline in China’s lead concentrate output in October, which aggravated concentrate shortages. 

Demand for the raw material started rising in September as some smelters built stocks for winter production.

‘Dr Copper Theory’; right or wrong?

Before the  market closed down last week, the ratings showed that, metal has sledged down to a four and a half year lower sides, but at the beginning of this week, copper is giving a bit of hope in the market. But for now the value of copper as one of the important industrial metal, has plunged down by 9 percent, and this is where a situation comes that, the ‘Dr Copper Theory” becomes a warning, for some of the investors, regarding where the stock is going.

According to this honored theory present in the market, the metal; copper has an ability to sense the economic turning point on the globe, and hence could also measure the health of the stock market rally. This is because copper is a boundless metal, which is being used in homes, power industries, and many other forms of industries. So when the price of copper is falling down, then it means that the whole financial assets are being affected.

George Gero, based on RBC Capital Markets commented that, as the metal has limitless uses in the industry, it can be said to be an indicator of the economy. And therefore the decline in the value of copper, will in turn raises concerns regarding the whole financial sector.

Even when saying so, Chris Kimble based on Kimple Charting Solutions, stated that, the copper price has been slowing down for the last few years but the equities have been climbing up swiftly. Then, as usual the question arises, is the ‘Dr Copper theory’ effective?

Gold hits 5-week high from early dive triggered by Swiss referendum

Gold prices experienced a dramatic comeback Monday after falling sharply in overnight trading due to Swiss voters unquestionably rejecting a proposal to boost the country’s gold reserves.

The precious metal traded as low as $1,141.70 an ounce overnight, bouncing back to a peak of $1,220 in early afternoon trading.

Spot gold climbed up 2.4% at $1,194.98, while U.S. gold futures for December delivery were up $18.20 at $1,193.70 an ounce.

A combination of factors worked to support gold Monday, including heavy short covering and buy stop orders triggered in the futures, and bargain hunting in the cash market.

A combination of factors worked to support gold Monday, including heavy short covering and buy stop orders triggered in the futures, and bargain hunting in the cash market. A weaker dollar and a recovery in oil prices also helped.

Some safe-haven buying also emerged after a downgrade of Japanese debt and weak manufacturing data around the world, market watchers said.

Gold had started the week in a frail note after the “Save our Gold” position was defeated in Switzerland’s referendum Sunday.

Proposed by the right-wing Swiss People's Party out of concern that the Swiss National Bank (SNB) has already sold too much gold, the measure would have compelled the bank to increase its gold reserves to 20% from around 8% it holds at the moment.

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Gold, Silver, Crude Prices approximate as of 2:40 PM Central.

Is the Bottom In?

These are enormous 1-day swings. Coupled with previous action, it's likely gold and silver have hit at least a short-term bottom, and likely much longer.

Swiss Gold Referendum Fails: 78% Vote Against "Protecting The Country's Wealth"

Whether as a result of an unprecedented scare campaign by the Swiss National Bank (most recently reinforced by Citigroup), or due to confidence that Swiss gold is as safe abroad as it is at home, or simply due to good old-fashioned "hanging chads", today's most awaited event has come and gone and the result - according to early projections by Swiss television SRF - is that the Swiss population overwhelmingly rejected a referendum to force the Swiss National Bank to hold some 20% of its reserves in gold in a landslide vote, with about 78% voting against what AP politely termed "protecting the country's wealth by investing in gold."

As Bloomberg reports, the proposal stipulating the Swiss National Bank hold at least 20 percent of its 520-billion-franc ($540 billion) balance sheet in gold was voted down by 78 percent to 22 percent, according to projections by Swiss television SRF as of 1:00 p.m. local time. The initiative “Save Our Swiss Gold” also would have prohibited the SNB from ever selling any of its bullion and required the 30 percent currently stored in Canada and the U.K. to be repatriated.

A map showing the breakdown of the Swiss vote by canton: none of the 23 Swiss regions had a majority vote for the gold initiative.

That said the decision will likley not come as a surprise because while early polls gave the yes camp a surprising lead, subsequently polling showed a marked shift in public opinion, and forecast the initiative’s rejection.

The biggest winner, of course, is the Swiss central bank: SNB policy makers warned repeatedly that the measure would have made it harder to keep prices stable and shield the central bank’s cap on the franc of 1.20 per euro. That minimum exchange rate was set three years ago, with the SNB pledging to buy foreign currency in unlimited amounts to defend it.

“The SNB can feel confirmed in its policy,” said Martin Gueth, economist at LBBW in Stuttgart. “By rejecting the gold measure, voters have come out in favor of its current stance.”

Referendums are a key feature of Switzerland’s system of direct democracy, and are held nationally and at a municipal level several times a year. The gold initiative was launched by a handful of members of the European Union-skeptic Swiss People’s Party. Uneasy about the more than 100 billion euros the SNB holds, they contend their initiative will strengthen -- not weaken -- the central bank’s credibility.

However, SNB President Jordan labeled the initiative “dangerous” and his fellow board member Fritz Zurbruegg said accepting the measure meant the room for maneuver “on currency reserves would be dramatically restricted, with negative consequences for the Swiss economy.”

The central bank, based in Bern and Zurich, would have faced a three-year deadline for repatriating its bullion from abroad and five to meet the 20 percent benchmark. With the European Central Bank poised to enact more stimulus to boost feeble growth and inflation, economists surveyed by Bloomberg News in a poll published on Nov. 19 had expected the SNB to maintain its ceiling on the franc into 2017.

The question now is what will happen to the Swiss France, which recently rose to a 26-month high against the euro. For many the concern that a successful gold referendum served as a catalyst to avoid going all in the CHF, as gold purchases would have weakened the currency. “If the euro crisis doesn’t get worse, then the minimum exchange rate will be defendable, said David Marmet, an economist at Zuercher Kantonalbank. Had the initiative been accepted, ‘‘instruments such as negative rates that don’t widen the balance sheet” would have been an option, he said.

With the referendum out of the way, the CHF may paradoxically find itself with a situation in which the inflows in the CHF force it to double down on defending the cap: economists have questioned whether the SNB will now find itself having to reinforce its cap with a negative interest rate on the cash-like deposits commercial banks keep with the central bank, making good on its threat to take further steps “immediately” if necessary.

And then there is the question of what happens to the tension in the gold swap market: as noted last week, the 1 Month GOFO rate had tumbled to the most negative in over a decade. It was not clear if this collateral gold squeeze was the result of Swiss referendum overhang or due to other reasons. The market's reaction on Monday should answer those questions.