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Stock Market Trend Forecast March to September 2019

Gold, Treasuries Still In Bearish Camp For Stocks

Stock-Markets / Financial Markets 2011 Nov 05, 2011 - 02:16 AM GMT

By: Chris_Ciovacco

Stock-Markets

Best Financial Markets Analysis ArticleThe bulls have is significant feather in their cap in the form of conviction. While numerous fundamental and technical factors point toward negative outcomes for equities, the force with which stocks have rallied looks more like the early stages of a bull market, rather than a bear market. Having said that, numerous market ratios, including the gold:Treasury ratio, have not broken into bull market territory yet.


The video below explores the current ratio of gold (GLD) to Treasuries (TLT). The ratio helps us monitor the battle between:

  1. Inflation via GLD and deflation via TLT.
  2. The bulls via GLD and bears via TLT.

Like many markets, the GLD:TLT ratio is near a possible inflection point. However, the ratio was near a similar bullish inflection point in 2008 before stocks and gold took another leg down. The points below highlight similarities between 2008 and 2011:

  1. A1 & A2: GLD:TLT ratio makes similar twin peaks.
  2. B1 & B2: Ratio breaks inflation/bullish trend.
  3. C1 & C2: When the indicator, Williams % R, remains weak, the bear market in stocks remained intact (left of C1, right of C2). When the indicator moved back above -20 (overbought), the bear market was nearing its end.

The video expands the commentary on the two charts above and also comments on Italian bond yields.

After you click play, use the button in the lower-right corner of the video player to view in full-screen mode. Hit Esc to exit full-screen mode. If you want to skip the technicals, comments on Europe begin at the 10:33 mark.

Some developments from Europe via Bloomberg:

World leaders meeting at the G-20 summit in Cannes, France, balked at spending more money to help bail out the euro-area, demanding the region’s own governments first do more to fix the two-year-old debt crisis. Governments are awaiting further details of Europe’s own week-old rescue package before they commit cash, German Chancellor Angela Merkel said on the final day of a Group of 20 summit in Cannes, France.

From Reuters:

HIGHLIGHTS-Comments by policymakers at Cannes G20:

GERMAN CHANCELLOR ANGELA MERKEL

“There are hardly any countries here which said they were ready to go along with the EFSF (euro zone rescue fund).”

BRITISH PRIME MINISTER DAVID CAMERON

“Every day that the euro zone crisis continues is a day that has a chilling effect on the rest of the world economy.”

“Britain will not contribute to the euro zone bailout fund and we are clear that the IMF will not contribute to the euro bailout fund either.”

“Global action cannot be a substitute for concerted action by the euro zone to stand behind their currency.”

“The job of the IMF is to help countries in distress, not to support currency unions.”

“The world can’t wait for the euro zone to through endless questions and changes about this.”

“You can’t ask the IMF, nor should you, nor ever would I, ask the IMF to put its money into a euro zone bail out fund - that wouldn’t be right.”

“Britain will not invest in a euro zone bailout fund. Britain will not invest in the IMF, so the IMF can invest in a euro zone bailout fund. That is not going to happen.”

From the BBC:

Italy’s planned budgetary reforms lack credibility, IMF chief Christine Lagarde warned after a G20 summit dominated by the eurozone debt crisis. “The main problem we have, which has been clearly identified as much by the Italian authorities as by their partners, is a lack of credibility in the measures that have been announced,” Lagarde told reporters according to AFP news agency.

Ciovacco Capital Management

    Copyright (C) 2011 Ciovacco Capital Management, LLC All Rights Reserved.

    Chris Ciovacco is the Chief Investment Officer for Ciovacco Capital Management, LLC. More on the web at www.ciovaccocapital.com

    Ciovacco Capital Management, LLC is an independent money management firm based in Atlanta, Georgia. As a registered investment advisor, CCM helps individual investors, large & small; achieve improved investment results via independent research and globally diversified investment portfolios. Since we are a fee-based firm, our only objective is to help you protect and grow your assets. Our long-term, theme-oriented, buy-and-hold approach allows for portfolio rebalancing from time to time to adjust to new opportunities or changing market conditions. When looking at money managers in Atlanta, take a hard look at CCM.

    All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors and tax advisors before making any investment decisions. Opinions expressed in these reports may change without prior notice. This memorandum is based on information available to the public. No representation is made that it is accurate or complete. This memorandum is not an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. The investments discussed or recommended in this report may be unsuitable for investors depending on their specific investment objectives and financial position. Past performance is not necessarily a guide to future performance. The price or value of the investments to which this report relates, either directly or indirectly, may fall or rise against the interest of investors. All prices and yields contained in this report are subject to change without notice. This information is based on hypothetical assumptions and is intended for illustrative purposes only. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION CONTAINED IN THIS ARTICLE. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.

    Chris Ciovacco Archive

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