What is gold trying to tell us? There could be any number of things, none of which are nice. I have been looking for a correction but the way the price has held in there, I wonder at times if it wants to have another leg up first. However, I think the chart would look better if it did some more work up here. The price has gone up nearly four hundred dollars since it broke out of that lovely little triangle less than two months ago.
Considering the amount gold has moved, the performance of our gold stocks has been somewhat disappointing. However, when we look at the weekly chart of XGD (semi-log scale) we see there is a lovely big head and shoulders pattern that I have highlighted previously. Friday saw this index poke its nose just above the first band of resistance. However, short term my indicator on this sector is overbought so I really would like to see a bit of work here.
When we move to the monthly chart – again semi-log scale – We can clearly see the potential for this sector. Note the top back there in 2010/2011 and then again in 2020/2021 so we can understand why there is heavy resistance up here but….once it breaks topside, it will be almost a free run. Note that consolidation back in 2013 to 2016 that I have circled, once it broke topside from that pattern it quickly ran up over a few short months. I think this is the type of move we could ultimately see again in this index.
Now having a look at Wall Street and back to the S&P – note that little gap fill that I have arrowed that we achieved on Friday night. How do markets know exactly where a gap is hiding? Short-term this index is getting oversold with six down days. As I have mentioned before there is no magic about say six down days but usually that is enough to play out the short-term emotions in the market. But we can’t forget that occasion last year when the Dow went up for thirteen consecutive trading days but that was followed by a three-month consolidation! My Geniuses were back to 61% invested as at the close of trading on Wednesday so it is likely they have added to their cash by now. However, looking at the big picture across many world markets, I think we are in the throes of building major tops. May take weeks or even months. Usually markets make things as painful as possible by rallying a few times to get everyone to think the game is still on only to reverse once everyone starts to relax.
Worthwhile having a quick look at Nvidia seeing as it was such a market darling up until about six weeks ago. Has broken its first really steep uptrend having fallen over two hundred dollars a share. But it looks to me that it might need to do a bit more work up here.
US ten-year bond rate – The rise during this past week has actually met the target out of that nice triangle. Perhaps this needs to do a bit more work – a pull back towards the top of that triangle would look good. That would mean rates easing a bit.
I have highlighted the chart of steel before. Look what it has done. Run up to the recent little top pattern. Again, a bit of a correction here would look good.
And for something a bit different the monthly chart of uranium (semi-log scale). Hasn’t it been a fantastic chart. Good to keep in mind that the price got to as low as $18 in 2016 so it has had a terrific rise. Here again, further consolidation up here would look good.
And finally, the Nikkei. Now what is that trying to tell us? I highlighted this chart a few weeks ago when it broke that fabulous uptrend but as we can see – prices have now come all the way back to sit below its previous all-time high set in 1989. Can’t be far off a decent rally again but we may have already seen its high for this cycle.
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