Alarm Bells Begin To Ring In The Market

GOLD - COMMODITY EXCHANGE INC. Code-088691
FUTURES ONLY POSITIONS AS OF 10/02/18 |
--------------------------------------------------------------| NONREPORTABLE
 NON-COMMERCIAL | COMMERCIAL | TOTAL | POSITIONS
--------------------------|-----------------|-----------------|-----------------
 LONG | SHORT |SPREADS | LONG | SHORT | LONG | SHORT | LONG | SHORT
--------------------------------------------------------------------------------
(CONTRACTS OF 100 TROY OUNCES) OPEN INTEREST: 459,776
COMMITMENTS
 192,490 214,312 48,629 169,371 160,496 410,490 423,437 49,286 36,339

CHANGES FROM 09/25/18 (CHANGE IN OPEN INTEREST: -503)
 -450 3,724 -3,268 1,467 -328 -2,251 128 1,748 -631

PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADERS
 41.9 46.6 10.6 36.8 34.9 89.3 92.1 10.7 7.9

NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS: 351)
 177 100 82 54 49 266 197 

Corelogic August Home Price Index

Chief economist Frank Nothaft added:

The rise in mortgage rates this summer to their highest level in seven years has made it more difficult for potential buyers to afford a home. The slackening in demand is reflected in the slowing of national appreciation, as illustrated in the CoreLogic Home Price Index. National appreciation in August was the slowest in nearly two years, and we expect appreciation to slow further in the coming year.

Companies Are Furiously Guiding Down Analyst Earnings Estimates

On the bull market villains list, it’s public enemy No. 1: peak earnings. At what point does the profit bubble pop? Ever since Caterpillar Inc. mentioned a “high water mark” in growth, Wall Street has been on alert. Led by high-profile warnings from Netflix Inc. and Applied Materials Inc., the number of S&P 500 companies saying profits will trail analyst estimates outnumbered those saying they’ll beat them by a ratio of 8-to-1 in the third quarter. That’s the most in Bloomberg data going back to 2010.

My view:
 
Reviewing the indicators over that past few weeks and seeing the most recent data, it is apparent that warning signs are appearing in this late stage bull market.
The gold market, which I often refer to as the golden thermometer, is showing interesting data too as large commercial positions have now become net long for 5 weeks.  Gold stocks, which have been beaten up for the better part of 2 years, are showing some signs of life again.
At this juncture, it is possible we will see the risk off trade strengthen, which would have the unusual effect of not only pushing up the US dollar but also have money flow into gold and gold stocks.
As earnings season begins again shortly, watch guidance that companies give and how many miss estimates that have already been lowered.
Our view is that a catalyst will soon push money into safe havens and out of bonds and the stock market.  Note that mid term elections for Congress are only a month away and could result in much higher volatility given the toxic political climate in the United States.