What a week we just had. And once more where to start? But I think gold takes the mantle this week.
My daily close chart of the gold cash price says it all. What a move. I mentioned previously that once the gold price broke through the old highs it would be a whole new ball game, so I wasn’t prepared to give upside targets. I still feel that way. Gold has now gone up over $300 since it broke topside out of that lovely little triangle at the beginning of March so short term it must soon have some sort of correction. But it doesn’t pay to stand in front of a moving train like this one.
View attachment 6089429Silver finally joined the party with a sharp move up once it broke recent highs. The point and figure chart shows this picture quite well. But silver is certainly still not leading and will continue to be dependent on the move in gold.
View attachment 6089432Gold stocks have been slow to take advantage of the massive move in gold. Actually I see this scepticism as quite bullish because it means that once gold has a correction and starts to move up again our gold index will do an impressive catch up. I have previously highlighted the potential for a lovely head and shoulders bottom on XGD – weekly semi-log chart. You can see what I mean about being slow to take advantage of the current gold price. But isn’t it a lovely chart.
View attachment 6089435At the beginning of the year, no one wanted to know about energy, but that attitude has changed recently. This chart of XLE (Energy Fund) is an interesting picture for the sector. Been a tremendous amount of M&A action in the US with the result that a few major companies now just about control the market. Note how this fund has broken through the old highs. I think it is getting a bit overdone short term so will be interesting to see what happens here.
View attachment 6089444Then we come to B.Com – daily chart together with the ratio to the S&P. Have to concentrate very closely here as unfortunately the ratio ran into the price scale. The ratio is in red so as we can see, commodities have underperformed since October last year. But I have arrowed two little lows in the ratio. Perfect double bottom. At the same time B.Com looks to have finally built some sort of reversal as well. But the really interesting part of this chart is the fact that finally commodities have outperformed the S&P even if it has only been for a short period.
View attachment 6089453Back to an old favourite chart – the daily of the S&P but this week I have included a different indicator. Starting at the top we can see that my Geniuses got to 104% invested again but in the space of one down day, got all the way back to 84%. In the last couple of days, we have seen a sharp fall in the S&P (an outside day) followed on Friday by a rally (an inside day). And now to the lower indictor. This is one of the most amazing charts I have ever drawn. It is the running total of the 52-week highs and the 52-week lows. Just look at that trendline. Have you ever seen anything more perfect. What it does indicate is that despite some nervousness when we had the sharp down day last Thursday, there continued to be more 52-week highs than lows. I was amazed that the trendline wasn’t broken. We need to watch these figures over coming days.
View attachment 6089456The Dax has been one of the most amazing markets since the lows late last year. But something seemed to have gone wrong in Friday’s trading – it broke the steep up trend. Not a good look.
View attachment 6089462The same sort of thing seems to have happened in Tokyo. That was certainly a less than glamourous way to end the week. But hasn’t it been a beautiful chart.
View attachment 6089465Another old favourite chart – US bond yields (red) and the Australian equivalent (black) They continue to be locked in trend. I never cease to be amazed at what is happening here but as I have put forth previously, why do we bother worrying about what our rates are going to do – just check the US.
View attachment 6089471And speaking of which, here is the actual daily chart of the US ten-year bonds. I highlighted the sharp move up earlier in the week. We need to watch this now to see if it is actually going to go higher.
View attachment 6089474And coming back home – we continue to run along behind what is happening elsewhere. But I cannot help including this chart again of XXJ (finance ex REITS). Just look at that trendline. It came back and tested it this week but so far has managed to close back above it. What a performance.
View attachment 6089477And to finish I must include this headline I saw through the week which probably explains a lot of what is happening in gold:
Is gold becoming a global battlefield? BRICS looks to bullion to challenge dollar dominanceAdd in the latest Central Bank buying and Middle East problems and we have a perfect storm for gold. I also saw a comment that gold is “the canary in the coal mine”. Doesn’t that sum it up perfectly.
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