Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Investors Take the Low Risk Road

Stock-Markets / Stock Markets 2015 Jul 17, 2015 - 09:05 PM GMT

By: DeviantInvestor

Stock-Markets

The S&P 500 Index has hit numerous new highs in the past three years.  Note the log-scale graph below and the broken support lines from 2000 and 2007.  The current support line, depending on where it is drawn, is on the verge of breaking.


Further, Paul Mylcheerst says the modified monthly MACD has given a sell signal on the S&P.  The same indicator gave sell signals close to the peaks in 2000 and 2007.

There is significant risk in the S&P 500 Index in spite of the fact that central banks and governments have successfully levitated the stock and bond markets.

By contrast, the XAU, an index of gold stocks, has fallen to a 13 year low, and the monthly MACD indicator that gave the sell signal on the S&P has tentatively indicated a buy signal on the XAU.

What about the ratios?

Consider the ratio of the XAU to the S&P 500 Index.  The ratio is at the low end of the 20 year range and at a 14 year low because the XAU stocks have been crushed and the S&P has been levitated.

The S&P up and XAU down trends appear ready to reverse.  The charts show extremes in prices and in the ratio.

The low risk trade is to sell S&P related stocks and to buy gold, silver, and gold and silver stocks.  Sell high and buy low!

CONCLUSIONS:

  • The S&P 500 Index hit an all-time high in May 2015.
  • The XAU index of gold stocks hit a 13 year low this month – July.
  • The XAU to S&P ratio shows that gold stocks have been weak for several years and appear ready to reverse higher.
  • Gold prices have been crushed since August 2011 while paper bonds and stocks have been “strongly encouraged” by global central banks.
  • The MACD (modified by Paul Mylcheerst) has given a monthly sell signal on the S&P 500 Index (don’t discount this), a buy signal on the XAU, and is close to a monthly buy signal on gold.

Take the low risk road.  At this time the S&P looks like a high risk path while gold, silver and the XAU look like a low risk road.

GE Christenson aka Deviant Investor If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

© 2015 Copyright Deviant Investor - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Deviant Investor Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in