Starting with the S&P again this week. Trading on Friday saw this index crawl up above the little band of resistance I have drawn on the chart, but I am not happy with the fact that we appear to have formed an up-slanting wedge pattern.
On the lower level of the chart is the VIX with the scale inverted. Here again an up-slanting wedge but it is still stuck in the band of resistance I have on the chart. The up-slanting wedge here looks even more pronounced than on the S&P. Not a good look.
The fact that the Dow has now had eight up-days has gained considerable comment. But remember last year at one stage it had thirteen consecutive days of advances and then filled in a couple of days before declining for three months. Not saying that is what is going to happen, but it seems that investors are turning to the major stocks as the former favourites lose a bit of their following.
The NASDAQ Comp highlights the point re the Dow – here we see that the index got all the way back up into the band of its previous highs but actually closed down on the day on Friday. As well the number of 52 week/high lows is positive but really is not showing enough power to add strength to the index. Disappointed with the NASDAQ this week.
Having spent quite a bit of time updating my charts on the US and thinking about the big picture, I felt like laughing when I got to the next chart – London FTSE. Just look at that uptrend. Mind you the FT had been trading in a big sideways pattern since 2017 and only this latest surge has been finding new highs - in a large part thanks to BHP’s offer for Anglo. Bit too steep to last much longer.
I included a chart of our Index (XJO) during the week. Updating it now, it rallied perfectly up under that uptrend and has turned down nicely. There is good support around that 7500/7600 zone. I think we will see it there fairly soon and then we should have another think about the outlook.
When we turn to the chart of BBOZ (our Bear Fund) we have what is looking like a big base pattern. We need to watch this chart as it might give us an early indication as to whether the XJO is going to break down out of the sideways trading formed this year.
Then when we look at XSR (Small Resources) we have an interesting situation. The chart here is a bit confusing so you have to study it closely. The index is in the middle and at the lower edge, the OB/OS index. At the top I have the ratio of the XSR to XJR which is the S&P 200 Resources Index. Note how the XSR is outperforming the main resources stocks. What this means in everyday language is that the smaller stocks are finding more support at the moment. Happy hunting!!
The next chart is the closing price of copper – daily. I included this chart during the week as well, as I am concerned how steep the uptrend is. I think it will be broken. If it is, then it is likely to have a bit of a negative influence on the previous chart of the XSR as well as the miners overall.
Next up the daily of the United States Oil Fund (USO). It looks to be pulling back to the support area here. This market is being dragged each way on a daily basis as the news fluctuates. Will be interesting to see if, once it gets into this band, it can form a reversal.
And gold. I have redrawn my daily high/lows chart just to be able to have a closer look at each day’s trading. I don’t like what it did on Friday night. Ran up – and closed on its low. I think this indicates that it still has more work to do before the next up wave gets underway.
As I keep mentioning, our gold stocks have not really kept pace with the sharp advance in gold with XGD still stuck around the upper boundary on the weekly chart going back to 2021 – four years. Hope it doesn’t take another four years to break out or I might miss it all together!! However, I still like the potential here. Just have to wait for gold to do a bit more work.
WEAT – the ETF for the wheat market. This has run up nicely once it broke the downtrend. I think it might need to do a bit more work before continuing higher but once more I must mention that this is one of my main indicators of inflation.
I saw this paragraph during the week which I think is a good overall comment on gold –
“The recent surge in the gold price is symptomatic of a changing world order and the onset of a new age of conflict and uncertainty. Governments and central banks have long viewed the precious metal as a potential source of monetary stability and economic security, and this time is no exception” Harold James - May 1st, 2024.
(20min delay)