Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

AI, Stocks, and Gold Stocks – Connected After All

Companies / AI May 31, 2023 - 09:08 PM GMT

By: P_Radomski_CFA

Companies

AI! Computers making intelligent decisions! New paradigm! Old laws don’t apply anymore! Long live the bull market! …Really?

Yes, AI is transformative. It already starts to enhance multiple businesses, just like the Internet did many years ago. And as many thought cryptocurrencies would.

But it doesn’t mean that the huge transformation will happen overnight! Or that it fixes everything with regard to the world’s problems in general or with the economic situation.

However, as always, markets – that are ultimately made of people (and bots that were programmed by people, anyway) – are emotional in the short run. And this emotionality is what likely we have just seen when the interest in AI soared.


AI Interest

We even have data to support it. Here’s how frequently “AI” has been searched with Google:



The first peak was in the Dec. 4-10, 2022 week, and the second peak was in the Apr. 16-22, 2023 week.

Now, the above is the interest in AI in general, not necessarily in investing in AI-oriented companies.

But the two are obviously connected, and the chart below proves it.

AI Investment Interest



The above chart features the AI stock price, which, primarily due to the symbol that it has on NYSE, we’re going to use as a proxy for the sector. The company (quoting their website) is an enterprise AI software provider for building enterprise-scale AI applications and accelerating digital transformation.

The value of the shares of this company has been declining in the previous years, but that definitely wasn’t the case this year!

What’s particularly interesting is how rallies followed peak interest.

I marked the Google-based peaks in interest with black arrows in the main part of the above chart.

What followed in both cases is that the price initially declined a bit, but then it picked up and soared with a vengeance. It took several weeks in both cases, and in both of them, the rally took an exponential form.

That powerful and unsustainable rally ended last time when the following happened:

  1. The MACD indicator moved above 3
  2. The RSI indicator moved above 70
  3. The AI price itself rallied on huge daily volume

That’s also exactly what we saw yesterday!

Yes, I know, one swallow doesn’t make a summer, and that’s just one similar situation from the past, BUT it’s one situation from the past that has remarkable number of similarities. It’s not just “one thing” like the RSI. It’s the whole package.

Since AI seems to be the driving force of the recent rally in stocks (just look at the headlines on any mainstream financial website for proof), the is likely an indication that stocks have just topped or are very close to their turning point.

That’s exactly what happened in early February when the previous top in AI formed. And it has some specific trading tips for gold stocks, and the stock market in general.

Implications for Stocks and Miners

Thanks to the vertical dashed lines, you can easily see what happened during those two specific times to stocks, junior miners (GDXJ), and FCX, which I’m using as a proxy for copper and gold (and which is interesting on its own due to how hard it fell in 2008, and due to the fact that we currently have a profitable position in it).

At that moment, in early February, stocks topped, and it was a pause in case of the GDXJ and FCX.

The aftermath was bearish in cases of all: AI, S&P 500, GDXJ, and FCX. It was particularly bearish for silver prices, too.

That was also the time, when the USD Index (which you can see at the bottom of the above chart) consolidated a bit and then moved higher once again. Interestingly, back then, the USD Index was after a breakout above the first of the declining support lines, and now it’s after its second breakout. This time, the importance of the breakout is much greater, so it’s normal that we saw a bigger rally thereafter.

So, what does all this AI-hype tell us?

That it’s probably over in the short- and/or medium term. I continue to see great potential in the AI sector in the long run, though.

And that the stocks are likely topping here, which, in turn, is likely to lead to lower mining stock values.

This also indicates that the miners might move lower and that betting on their rally in the very near term based on an oversold RSI is not as much of a “sure bet” that many think right now.

Back in 2008, after the pre-slide rally, mining stocks “seemed” like a good buy as well, and that didn’t end well at all.

Today's article is a small sample of what our subscribers enjoy on a daily basis. They know about both the market changes and our trading position changes exactly when they happen. Apart from the above, we've also shared with them the detailed analysis of the miners and the USD Index outlook. Check more of our free articles on our website, including this one – just drop by and have a look. We encourage you to sign up for our daily newsletter, too - it's free and if you don't like it, you can unsubscribe with just 2 clicks. You'll also get 7 days of free access to our premium daily Gold & Silver Trading Alerts to get a taste of all our care. Sign up for the free newsletter today!

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

https://www.goldpriceforecast.com

Tools for Effective Gold & Silver Investments - SunshineProfits.com

* * * * *

About Sunshine Profits

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Przemyslaw Radomski 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