Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20
Does the Stock Market Really "See" the Future? - 12th Sept 20
Basel III and Gold, Silver and Platinum - 12th Sept 20
Tech Stocks FANG Index Nearing Critical Support – Could Breakout At Any Moment - 12th Sept 20
The Tech Stocks Quantum AI EXPLOSION is Coming! - 12th Sept 20
AMD Zen 3 Ryzen 4000 Questions Answered on Cores, Prices, Benchmarks and Threadripper Launch - 12th Sept 20
The Inflation Mega-trend is Going Hyper! - 11th Sep 20
Gold / Silver Ratio: Slowly I Toined… - 11th Sep 20
Stock Market Correction or Reversal? The Jury Isn't Out! - 11th Sep 20
Crude Oil – The Bearish Outlook Remains - 11th Sep 20
Crude Oil Breaks Lower – Sparking Fears Of Another Sub $30 Price Collapse - 11th Sep 20
Inflation by Fiat - 10th Sep 20
Unemployment Rate Drops. Will It Drag Gold Down? - 10th Sep 20
How Does The Global Economy Recover After This Global Pandemic? - 10th Sep 20
The Best Mobile Casino - 10th Sep 20
QE4EVER! - 9th Sep 20
AMD Ryzen Zen 3 4800x 10 Core 5ghz CPU, Cinebench Benchmark Scores (Est.) - 9th Sep 20
Stock Traders’ Dreams Come True – Big Technical Price Swings Pending on SP500 - 9th Sep 20
Should You Be Concerned About The Stock Market Big Downside Rotation? - 9th Sep 20
Options Traders Keep "Opting" for Even Higher Stock Market Prices - 8th Sep 20
Gold Stocks in Correction Mode - 8th Sep 20
The law of long-term time preference and Gold ownership - 8th Sep 20
Gold Bull Markets: History and Prospects Ahead - 8th Sep 20
Sheffield City Centre Coronavirus Shopping Opera Ahead of Second Covid-19 Peak - 8th Sep 20
Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
From Trump’s TikTok Mess to US Tech Cold War against China - 7th Sep 20
The Federal Reserve vs. Judy Shelton And Gold - 7th Sep 20
Fed Dials Up Inflation Target…Own Gold - 7th Sep 20
Does Gold Still Have Plenty of Potential? - 7th Sep 20
CDC Shock Admission - THERE IS NO PANDEMIC! Over 90% of Deaths NOT From COVID19 - 7th Sep 20
Stock Market SPX to Gold/Silver Ratios Explored – What To Expect Next - 7th Sep 20
Is the Precious Metals Market really Overwhelmed and Chaotic - 7th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

SPX and Gold; Pivotal Points at Hand

Stock-Markets / Financial Markets 2019 Jan 18, 2019 - 12:22 PM GMT

By: Gary_Tanashian

Stock-Markets

Leaving aside our usual inclusion of macro fundamentals and market ratios, today let’s take a simple technical look at the S&P 500 and gold.

As the US stock market was becoming deeply oversold (and over-hated, sentiment-wise) in December we planned for a holiday seasonal bounce, which finally arrived with the immediate reversal after the Christmas Eve massacre when the machines (and a few human casino patrons) drove it to its downside climax. The bounce was almost a certainty, given the sentiment backdrop of the moment.

Our (NFTRH) view however, has been for an eventual decline from a significant momentum divergence (MACD & RSI) to the obvious support of 2100-2200 (which is also the rough measurement from the bearish pattern) on SPX per this weekly chart. The current market bounce was expected and necessary to rebuild the conditions for enough downside to meet our target.


But with a bounce, especially a powerful one coming off unsustainably poor sentiment, comes the question of whether it is just a bounce or is it something more? In markets nothing is certain and anyone claiming to have an answer to this question is simply selling confidence or a cemented viewpoint.

We had a probabilities and technical based projection of a strong but ultimately doomed bounce, and it has played out well. But we should also have a complete willingness to admit if/when wrong (about the doomed part). As of this writing the projection is not wrong; it is 100% on track to our intervening SPX bounce target of 2600-2650. The down-sloping SMA 50 has kissed this pig, right on the lips.

But a break through the SMA 50 would start to get market bears a little hot under the collar.

One thing that market bears have going for them is the VIX, which along with several other sentiment indicators that we track each week in NFTRH, indicates that the risk to a bearish view is much reduced now compared to December.

So if the cyclical, risk ‘on’ world is thought to be just bouncing what of the counter-cyclical asset, gold? The decision point for gold is that of ‘new bull market?’ or ‘no new bull market?’. Let’s use daily and monthly charts to answer these questions.

Gold’s daily chart is consolidating well above the 50 and 200 day moving averages, which are about to be hyped by the media as a “GOLDEN CROSS!!“. The warning on such hype is to eventually expect an opposite reaction. This could however, come after new short-term upside. Technically speaking, gold’s daily chart is looking pretty good, in a flag that is partially working off an overbought situation.

The key daily chart resistance (not shown here) we have been tracking in NFTRH is at 1309. The consolidation is lurking just below that area. If the flag breaks upward gold will probably ding the target. If it breaks down, this leg of the rally is over.

The monthly chart however, shows a situation that has not changed in years. The (technical) gateway to a new bull market in gold is the resistance between 1350 and 1400.

Some chartists are imagining a bullish Inverted Head & Shoulders and others an extended bowl-like bottom. But until a rise above 1300 and then a clean takeout of 1378 there is no new bull, technically speaking (although as you may know, NFTRH routinely gauges the sector by far more than nominal technicals).

The bull case does have a notable ally, however. The more times a key resistance area is tested the weaker it tends to become. It’s been tested twice already (3 times if you count early 2014). It is a monthly chart however, so the bull view would require time and patience.

Bottom Line

Above we view a premier cyclical market (SPX) and a premier counter-cyclical market (gold). A big part of our heretofore bullish fundamental view of gold has been the big crack in the stock market. SPX has made it all the way to our bounce target and now the decision is at hand; obediently fail from here and make Gary look smart (he’s not, he just works hard)? Or bust on through and bust our current analysis?

The implication for gold will likely be one of proceeding into an eventual bull market or another failure. To make matters more confusing (but that’s the market, isn’t it?) I can envision a scenario where the stock market fails, drops to 2100 and from there goes very bullish for a big rally at least. If gold has not clearly taken out 1400 by then I’d be cautious on the relic until stocks play out that rally.

But this article also presents a question about whether SPX has already bottomed (on Christmas Eve). If that is what proves to be true, gold will continue to fall out of favor as long as bulls thunder back into stocks.

We are getting a little too wordy now for a public article. That is why the detailed work needs a weekly report in order to continually hone the view. This article simply tries to show the pivotal situations in two opposing markets as they stand now.

Subscribe to NFTRH Premium (monthly at USD $33.50 or a 14% discounted yearly at USD $345.00) for an in-depth weekly market report, interim market updates and NFTRH+ chart and trade setup ideas, all archived/posted at the site and delivered to your inbox.

You can also keep up to date with plenty of actionable public content at NFTRH.com by using the email form on the right sidebar and get even more by joining our free eLetter. Or follow via Twitter ;@BiiwiiNFTRH, StockTwits or RSS. Also check out the quality market writers at Biiwii.com.

By Gary Tanashian

http://biiwii.com

© 2019 Copyright  Gary Tanashian - 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.

Gary Tanashian Archive

© 2005-2019 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

6 Critical Money Making Rules