Believe the Trump rally is losing its footing? You may want to explore investing in gold. » Read More
By: Amanda Diaz
President-elect Trump's policies will help the U.S. economy, but they won't be enough to save stocks long term, Faber said. » Read More
By: Annie Pei
Northman's Sven Henrich believes the bull market is on its last legs, and a recession is soon to follow. » Read More
The Nasdaq has been a major laggard this week, dropping 3 percent as the S&P 500 fell less than 1 percent and the Dow Jones industrial average has been nearly flat. And at this point, David Seaburg, the head of equity sales trading at Cowen & Co., says he doesn't know just what will end the selling.
"We are definitely seeing people sell a lot of names here. It is institutional selling on the desk," Seasburg said on Thursday's episode of "Futures Now." "I don't know who the incremental buyer is going to be when things really do start to pick up again."
The problem started when investors began to flee from high-beta momentum stocks.
"You're seeing a lot of the bigger high-beta names really being pushed down," Seaburg said. "We've seen a rotation out of the high-beta names into the high-value names, and it's been a clear rotation on our desk."
Then the results and guidance from Accenture, a major consulting and IT company, changed the outlook for larger tech companies. While the earnings results were weak, Accenture increased guidance, which some saw as a warning sign.
Bill Fleckenstein says that stock valuations have risen to absurd levels on the back of low interest rates. But though he remains staunchly bearish on equities, he still believes that it's not yet time to get short.
Valuations on certain tech stocks are "ridiculous—it's just plain ridiculous," Fleckenstein said on Tuesday's episode of "Futures Now." "But that doesn't really matter. Overvaluation, no matter how gargantuan, does not make stocks go down."
"When you get to a place where groups of securities can get wildly overvalued, usually that continues until they exhaust themselves, or until some monetary phenomenon upsets the apple cart," the noted short seller continued.
"But there can be no debate about absurd valuations. And you can't use zero percent interest rates as a justification, because the only reason rates are at zero percent is because of the same Fed that has caused the stock market to be infected with lunacy again."
Monday is shaping up to be a terrible day for the Nasdaq, as the Nasdaq composite slides 1.2 percent, and the more focused Nasdaq 100 index is down 1.0 percent, after bouncing back from its lows. What's notable is that a third of the decline in the Nasdaq 100 can be pegged on just three stocks that have been major tech darlings over the past year: Google, Facebook and Amazon.
"Ultimately, today, it's driven by the big names," said Rich Ilczyszyn, senior commodities broker at iiTrader. "Those big names took a shellacking on Friday, and you're seeing the carryover today."
Google dropped 2.1 percent on Monday, Facebook is down 4.2 percent and Amazon slid 2.5 percent.
Brian Stutland, of the Stutland Volatility Group, said a big article in Monday's Wall Street Journal about the problem click fraud poses for advertisers ("A 'Crisis' in Online Ads: One-Third of Traffic is Bogus") is likely weighing on Google as well as other companies in the space.
"That article has got a lot of people freaked out about these stocks," Stutland said. "Is the model still intact? Will there really be better revenue down the road?... So it's one piece of news that affects a number of names that are so much of the Nasdaq."
Peter Schiff has long held a dim view of the U.S. economy, and a cynical take on the bull market in equities. But even though he thinks stocks are a bad bet, Schiff would still never get short, because he thinks U.S. dollars are an even worse bet.
"Although I don't think there's a lot more upside in the stock market, I'm not looking for a collapse. But what I am looking for is a dollar collapse, so that even if the market continues to move higher, it's nominal highs only. It's not real highs adjusted for a loss of purchasing power in the dollar," Schiff said on Thursday's episode of "Futures Now."
The CEO of Euro Pacific Capital says that Fed stimulus will end up destroying the value of the dollar.
"As the Fed has to print more and more money to keep these asset bubbles inflated, it will diminish the value of the dollar," Schiff said.
So even though the Fed reduced QE once again on Wednesday, and Fed Chair Janet Yellen said that the fed funds rate could be increased sooner than many expect, Schiff doesn't believe the Fed will back away from stimulus.
In a passionate and charged debate on Thursday's episode of "Futures Now," Schiff and Dow presented divergent views on the Fed, government data and inflation. And interestingly, each of these disagreements came together to paint a picture of why they see gold going in different directions.
First of all, while Dow, author of the Behavioral Macro blog, sees gold going higher before it drops much lower, he says that the only way to gauge the action in gold is by looking at sentiment.
"The longer-term view on gold is still bearish," Dow said. "I think ultimately the economy will improve, rates will go higher, we're not going to get the inflation that a few people still fear, and that will mean that the second half of the gold bubble will melt. But it's hard to tell if we're at that point now, or if that point comes a few months out."
For Dow, "gold is the ultimate psychological trade. It's the ultimate sentiment-driven asset. It's not about fundamentals. There are no fundamentals. ... So you really have to go by how the sentiment is manifest in the market, and whether or not it's at an extreme."
Dow believes that sentiment is now neither especially bullish nor exceptionally bearish, making it difficult to predict gold's next move.
But Schiff's take is very different.
"I disagree with just about everything that Mark said with respect to his comments on sentiment," Schiff responded. "I still think the sentiment is quite negative on gold. Maybe not as negative as it was, but very few people believe in this rally ... so I think the sentiment still favors higher gold prices."
"The fundamentals have favored higher gold prices all along," Schiff continued. "It's just that most people don't understand how great [the fundamentals] are. They believe the myth of the U.S. recovery. They believe the Fed can actually unwind its balance sheet, that it can end QE, that it can raise interest rates and that the economy is going to keep on expanding. None of that is going to happen. It's all fantasy. "
But Dow says that Schiff's understanding of the Fed is fundamentally flawed.
"I think what people really haven't been understanding and are slowly coming around to is how the transmission of monetary policy actually works. A lot of people way back in 2009, 2010 started predicting inflation, an explosion of yields, a collapse in the dollar—a whole series of things that didn't manifest themselves. Now people are starting to learn that, wait a minute, printing money does not lead to inflation automatically," Dow said.
Gold is in the midst of its worst two-day stretch since December. But the Commodities King isn't ready to throw in the towel just yet.
"For the moment at least, the fear of war in Russia has been alleviated. But it's not eliminated. It's just been alleviated, and it was the fear of war that sent gold prices higher in the first place," Dennis Gartman said on Tuesday's edition of "Futures Now."
According to Gartman, publisher of The Gartman Letter, only one thing matters most to gold bugs now: Vladimir Putin. The greater the tension in Ukraine, the higher gold prices should go, Gartman said. As those pressures ease, gold should fall.
(Read more: Gold ends 1% lower as stocks rally on Putin speech)
"Any incursion by the Russians into mainland Ukraine, while unlikely, but remotely possible, would send gold soaring," Gartman said.
Of course, it's been quite the year for bullion. Gold is up 13.3 percent year-to-date, and if it can hold its gains, it would be its best first-quarter performance since 1985. Gold is also on track for its best overall quarter since the third quarter of 2007.
But despite the gains, Gartman still sees some near-term gold headwinds. "Central bank policy changes are not imminent, so those concerns are not driving gold; stocks are firmer, so that is weighing upon gold prices as money moves back from gold into equities. There is no sense of rising inflation and oil prices are at best steady, and that too weighs upon gold."
Still, in the long term Gartman remains a solid bull, noting that sentiment and the technical setup are still very constructive for gold.
"The chart is going from the lower left to the upper right," said Gartman. "And in my view, that should continue for some time, and you should buy."
CME Group brings buyers and sellers together through its CME Globex electronic trading platform and trading facilities in New York and Chicago.
Take your trading to the next level with a platform that lets you trade stocks, options, futures and forex all in one place with no platform or data with no trade minimums. Open an account with TD Ameritrade and get up to $600 cash.