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As human beings we try to intellectualize and get to the bottom of
things. We seek to find meaning in everything. There must be a reason for what is happening at any given time.
Take for example the Dow’s stellar performance and gold’s lousy
performance even as monetary policy has gone reckless on a global
scale. This goes against everything that humans who deal with the
financial markets think they know. But what if we are just getting back
into symmetry?
Dow & Gold, daily chart
We have been reviewing different versions of this chart in NFTRH
over the last several weeks as the S&P 500 approaches a
long-standing target of 1550+. Today it looks like that target will be
hit and exceeded with ease, but last summer and right through the Fiscal
Cliff nonsense in December, very few were willing to entertain such
crazy talk.
S&P 500 monthly chart
(Editor’s note – Gary Tanashian gives us the post below, which is timely given my newfound love of gold. Just to be clear, particularly for the miners, I am long precious metals as a bounce play; I am as bearish on miners as ever – – I don’t feel nearly as strongly about the metals themselves – – and have every intention of shorting the bejesus out of miners once they’ve bounced; however, some of the battered miners might spring 50% higher from current levels, so it pays to wait – Tim)
The noise of the day includes much hand-wringing about gold
manipulation, gold’s precarious technical situation, the end of gold as a
useful tool for protection against inflation and even the end of its
bull market. But maybe a simple look at the facts works better.
Central Banks’ Balance Sheets vs. Gold. Source: DoubleLine Funds
GOOG was charted several months ago
showing a breakout and retest. Well, it went on and on and on and has
now come to what would be the most optimistic measured target at 830.
Just sayin’.
GOOG weekly chart Biiwii.com
If you are a speculator, the extreme situations currently in play in
the broad stock market (95% of the way to a potential ‘triple top’
scenario price-wise, and 80+% of the way time-wise) and the gold market
(impulsive price drops amid growing concerns that the bull is dead
despite rising money supply data) as of March 1, 2013 are the situations
that you wait for.
In short, pivot points are the place to deploy capital (either to the
short or long side) for big gains. The stock market has been on a
cyclical trend for 4 years and a secular, mostly sideways trend for 12
years. Gold has been in cyclical downtrend for 1.5 years and a secular
uptrend for 12 years. That is all well and good but trends can be a
grind, filled with ups and downs, stops and starts.
