The stock market vs. gold (SPY-GLD ratio) has a measured target significantly higher by this big picture monthly chart.
SPY-GLD Ratio, Monthly
But it is very over bought by the daily view, which also can be interpreted to be at an interim target at the least.
SPY-GLD Ratio, Daily
Yes, I get it that the crusty old gold bugs are an anachronism and life is all about texting, tweeting and buying all the stuff advertised on idiotic super bowl commercials. I get it that the stock market is filling up with all the fools that never saw the financial crisis coming and are now relieved that it is finally in the rear view mirror.
I get it that all those hedge funds that chased gold have realized the error of their ways. The crisis is over, there is no inflation. They were the screw balls that messed up the CoTs and gave us the biggest warnings by the way. Better these low lifes are flushed. I get it.
“I will gladly be a contrary indicator with the continued caution against bottom calling. But a breakdown in the gold stocks and continued weakness in gold would not only kill the bottoming case, but start the clock ticking on the stock market’s bull termination, as one of several indicators.
So have they stopped bottom calling yet in gold bug land? I ask because the sector may not bottom until they do.”
Not sure about the bottom calling, but as of an email received last night Mr. Gold has joined forces with the King of all Newsletters in telling gold bugs to hold firm, hold the line and “not be hoodwinked by these demonic sociopath bankster gold banks”.
That kind of emotion and hyperbole does nobody any good. Turning it into an indicator, does this still need to be puked out or is today a capitulation? HUI’s loss of 460 was a long time ago and that was when gold bugs who think for themselves should have been amp’ing up the risk management.
The spec’s were less brave on gold while the goons covered. The spec’s were braver on silver while the goons shorted. So I guess I like gold better than silver for a while and I guess I am hedging in alignment with that. I don’t fight the goons. I try to wait them out and be alive when the time comes to capitalize.
One wonders if this is an indicator of a liquidity blip to come. Well by one wonders I mean one crazy blogger who sloshes around in these indicators looking for clues. Are T bonds over sold enough for a counter trend bounce? Will this coincide with a Yen recovery? What about junk bonds? Is that ding over the last few days real or Memorex?
The Currency Shares ETF is dropping hard and I still think Yen could be setting up for a hard relief bounce at or just above the measured H&S target. That is because a) the H&S would be technically satisfied, b) the Japanese markets are thus far operating on jawboning more than anything and c) every momo hedge fund jock on the planet is probably short the Yen.
Bigger picture, Yen continues to look like the USD with about a decade stagger.
It is probably worth keeping an eye on this speculative playground from Canada. Most of the smart resources people have all but given up on this area due to so many scam stocks and so much legacy financing from the previous bull cycle.
But the chart says that the red dotted resistance line and the red weekly EMA 20 are being dealt with now, amid some modest bullish divergence by MACD and RSI. It would be interesting to see if CDNX can get over this resistance and get a party started.
Personally, I’d prefer sounder commodity exposure than lottery tickets, but…
I found this article to be so good I asked its author for permission to publish his work. Mike Ashton will be featured on the Guest Commentary page going forward. His blog, E-piphany is also linked in the Blogroll at right.