Improbably enough, the stock market vs gold (SPY-GLD) looks like a chart I’d be watching for a potential buy if it were a stock (ref. yesterday’s post on FTEK and GOGO). It is constructive at least.
With the gold sector having been a good performer so far in 2014 and with some Ukraine static at least partially baked into gold (the old geopolitical crisis hedge canard), I guess the above is viable.
Also, as we noted in NFTRH last weekend, public opinion on silver (the PM leader) was way too bullish and the CoT data were gathering toward a structure where a reaction could happen. We were well prepared for that.
So while I remain oh so bearish the market on a risk vs. reward basis, the possibility is that preparation for a burst up in stocks vs. gold may be warranted as well.
Just about the only thing standing in the stock market’s way is that the SOX, which we used as a leader to the entire rally out of Q4 2012, is still deciding whether or not to decisively break that long term resistance we reviewed the other day.
The charts are the charts.
Best Buy, which now calls itself an ‘online first’ retailer got a big bump on its earnings today. Then it flopped big, in-day. Then I bought. The pattern has been activated, risk the neckline.
Look, if they are going to make me a bull (or at least not let me be a bear yet) I am going to do it on my terms, which means bottom feeding. BBRY, FTEK, GOGO and now BBY… post consolidation and/or bottoming patterns.
I may choose to hold the SPY puts (currently -9%) against these stock holdings. They’re dated out far enough. Combined with other stocks held, this portfolio of ‘regular’ stocks can use the hedge for now. Yes, hedge for now while the dumbest of bulls (S&P 500 all time high close!!) enjoy the limelight. But if it looks like melt up city (market breaks up from this Robo consolidation), those puts’ll probably be gone.
This ratio is not a friend to the economy nor the financial markets when it is in decline. We have been following the Palladium Gold Ratio for over a year in NFTRH, first to gauge the coming of an economic bounce (check) and now the coming of its end (potentially in process).
Here is a daily chart showing some bearish signals, but the weekly chart and moving average cross overs is what we watch in NFTRH for the real signals, along with lots and lots of other really geeky macro charts.
Palladium = Positively correlated to the economy relative to gold.
The original intent was as noted here at the site last week, to allow some room to build a bearish case for 3D Systems (DDD). But even with 30 pages that did not happen. Maybe I’ll find time to do it as a public post.
What did happen was a well rounded look at the precious metals along with the usual markets. Also this somehow got into the ‘Wrap Up’ segment…
Guest Analysis by Bob Hoye
Click for full report
I found this chart while rummaging through old NFTRH charts looking for a monthly view of the Semiconductor Index (I’ll find it or create a new one and post shortly) that projected the current level as important resistance… or a seemingly ridiculous upside target would be loaded.
Monthly Gold-CCI shows that with a higher low still intact, we continue on in a macro phase of chronic global economic contraction (against which our heroes have worked their inflationary magic).
Gold-CCI ratio monthly, from NFTRH 254
Guest Post by Tom McClellan
February 21, 2014
One of the really fun leading indication relationships involves the yield curve, the spread between interest rates on similar securities across different maturities. The real yield curve has too many data points each day for visual modeling, and so a simplistic model of the yield curve can suffice to make for easier modeling. In this week’s chart, the role of the entire yield curve is portrayed by the spread between the 10-year T-Note yield and the 3-month T-Bill yield.