Something to look out for on the allocation front.
We could be putting in a large inverse H&S on the Indu:Gold ratio. The measurements on the inverse H&S measure up nicely with the ratio's primary trend line.
If gold holds steady around $354, the first tick of trading on the Dow will give the Indu:Gold ratio a perfect second shoulder. If gold pulls back and the Dow heads higher we'll have a measured ratio target around 30.47 near the end of January, a perfect bounce off the trend line.
stockcharts.com[r,a]dhcayiay[d19991128,20021218][pb200!c200!d20,2!f][vc60][iLl14!Lb14!Lg!Li10,10!Lh5,5!Lp14,3,3!Ll14][J8543229,Y]&pref=G
We're also oversold on the Indu:HUI ratio but we have successfully put in a lower low.
stockcharts.com[r,a]dhcayiay[d19991128,20021218][pb200!c200!d20,2!f][vc60][iLl14!Lb14!Lg!Li10,10!Lh5,5!Lp14,3,3!Ll14][J8555891,Y]&pref=G
The only problem is the Indu:Xau ratio has not put in a lower low
stockcharts.com[r,a]dhcayiay[d19991128,20021218][pb200!c200!d20,2!f][vc60][iLl14!Lb14!Lg!Li10,10!Lh5,5!Lp14,3,3!Ll14][J8542640,Y]&pref=G
Go Silver? <g>
On the other hand you have Spx:10-Yr resting near its trend line but all technicals have broken down showing an allocation switch may be in the cards if that center trend line is broken
stockcharts.com[r,a]dhcayiay[d19991128,20021218][pb200!c200!d20,2!f][vc60][iLl14!Lb14!Lg!Li10,10!Lh5,5!Lp14,3,3!Ll14][J8554996,Y]&pref=G
I think the key to a rally in equities is if that inverse H&S on gold breaks up and the Spx to 10-Yr relationship holds that center trend line. If both happen we could have an added boost of liquidity in equities and our final leg up before another washout phase. |
