by Bill Holter
Over the last three weeks, U.S. equity markets have recovered and are now more overbought than any time since 2009. While this is the case with equities, it is not the case with high yield debt. As I have said many times before, credit analysts actually look under the hood to discern the real situation and credit at this point is not buying the equity bounce/short squeeze. In fact, high yield credit spreads are rivalling the dark days of 2008.
The other area of interest since January is gold and silver. Gold and to a lesser extent silver are quite overbought short term. Many analysts in the “alternative” space have been recently cautioning that gold and the mining shares are about to be monkey hammered. Other than being overbought, we also have COT numbers showing the commercials very net short and the same setup as prior to previous waterfall events. So where do we go from here?