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Market Analysis 24 Mar 2022

Mar 24th, 2022 No comments

Executive summary

US equity breakdown patterns have created a strong technical buy signal resulting in a more than 7% reversal up, and the beginning of what could be a continuation of the bull market. Price has in fact powered up through all the moving averages and is about to test strong resistance levels at the top of the market. There will now likely be a corrective pullback followed by directional clarity in the next number of weeks. The oscillators are reasonably neutral indicating neither overbought nor oversold conditions as yet.


US Treasury 10 year yield accelerates after a strong breakout which is pushing the US Federal Reserve into rate hikes. The US bond market is therefore increasing its rate of collapse, with money seemingly being switched into equities. This is likely to persist and present indications point to probably 8 US rate hikes during 2022, with the economic cycle turning towards higher interest rates. We seem therefore to still be in the mode of equity and Treasury values inversely correlated before the mould ruptures and both equities and bonds both decline in positive correlation. This could be the indication why a major bear market has in fact not yet started.


The rampant dollar remains elevated as the US rate hike potential rises powerfully, as compared to weak EU rate hike potential. The dollar is also supported by safe haven demand because of the Ukraine invasion, and that does not appear to be changing anytime soon. Gold peaks and declines into consolidation after which it could move either way.

S+P 500

The S+P 500 breakdown pattern has created compound buy divergence which in turn resulted in a more than 7% reversal and the beginning of what could be a continuation of the bull market. Price has in fact powered up through all the moving averages and is about to test strong resistance levels at the top of the market. There will now likely be a corrective pullback followed by directional clarity in the next number of weeks. The oscillators are reasonably neutral indicating neither overbought nor oversold conditions as yet.

US Treasuries

US Treasury 10 year yield accelerates after a strong breakout which is pushing the US Federal Reserve into rate hikes. The US bond market is therefore increasing its rate of collapse, with money seemingly being switched into equities. This is likely to persist and present indications point to probably 8 US rate hikes during 2022, with the economic cycle turning towards higher interest rates. We seem therefore to still be in the mode of equity and Treasury values inversely correlated before the mould ruptures and both equities and bonds both decline in positive correlation.

The Treasury yield and gold comparison chart is finally illustrating yield and gold moving opposite to one another, as they have been doing in the past month. Although the general bias is still in positive correlation, which began about Jun 2021. It will be interesting to note how the trend continues.

US Dollar

The rampant dollar remains elevated as the US rate hike potential rises to 8 for 2022, as compared to 2 for the EU. The dollar is also supported by safe haven demand because of the Ukraine invasion, and that does not appear to be changing anytime soon.

EuroDollar

The Euro, being the virtual opposite of the dollar, remains depressed with weak Treasury yield growth and potential rate hikes well below that of the US. The Russian invasion of Ukraine and the close EU proximity continues to undermine Euro strength, and this is likely to continue.

South African Rand

The Rand is set to weaken as the DollarRand looks set to breakout to higher levels as strong buy divergence develops along with continued dollar strength.

Gold

Gold peaks and declines into consolidation just above support levels, after which it could move either way with the oscillators largely neutral. US miners have been in strong support and have not yet declined in line with gold, which could be bullish. Also, to expect any bearish influence from increased US Treasury yields we will need first to move completely through this period of increased hostile geopolitics.

The gold view over 3 years illustrates the potential of a very bullish ‘Cup & Handle’ breakout if gold now rises to a new high. This will catapult price up by the depth of the Cup to potentially $2500.

Hui : Gold Ratio

The HUI – gold ratio rises through a string of breakouts in a rising wedge pattern which now threatens to all come tumbling down. But the chart formation since Oct 2021 is a very powerful trade setup for now, with numerous activated inverted head and shoulders and an activated Cup & Handle.

GDX US Gold ETF

GDX, like the earlier HUI – Gold ratio, also rises through a string of breakouts in a rising channel pattern which now threatens to all come tumbling down. But the chart formation is a very powerful trade setup for now, with an activated inverted head and shoulders and an activated Cup & Handle.

The GDX Juniors / GDX ratio illustrates the juniors leading the majors down the reducing channel which indicates more miner weakness to come. However, reducing channels do breakout at some point (acting as a bull flag) and when this happens the miners will advance in price.

Silver

Silver peaks and declines into consolidation just above support levels, after which it could move either way with the oscillators largely neutral. Silver is still in non-confirmation with gold in not exceeding the high of Jun 2021, and this is bearish. But the chart pattern is still bullish with numerous activated inverted head & shoulders patterns including bullish Cup & Handle potential with another new high.

Gold : Silver Ratio

The gold : Silver ratio drifts into a triangle apex which could move either way and indicates little at this stage.

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Market Analysis 3 Mar 2022

Mar 3rd, 2022 No comments

Executive summary

US equity breakdowns threaten a major decline, in the wake of the triggered technical sell signals. But partial recovery is in process as dichotomy in the markets continue to lurk in burgeoning commodity prices such as oil, for instance. The world could be on the brink of war as geopolitics erupts, but there is still no panic. In the recovery process the sell signal has turned into a new buy signal as oscillators turn positive. This has the 200-Day moving average on the brink of a breakout, and equity markets appear to be poised between new lows and new highs. The next week or two will certainly be telling.

US Treasury 10 year yield holds the broad strengthening bias with a reversal up from recent weakness, in a precursor towards yet higher yields and the trend towards higher interest rates. This means Treasury values in recent strength start to decrease again as equities continue their revival. We seem to still be in the mode of equity and Treasury values inversely correlated before the mould ruptures and both equities and bonds either rise or fall in positive correlation.

The rampant dollar continues to edge up to new highs, supported by US Treasury yield positive bias and the resultant US Fed intended rate hikes this year. But in the process sell divergence is created by the somewhat weaker oscillator trend and this should result in a weaker dollar trend in due course. The Russian invasion in Ukraine adds to the already strong support for the dollar. This is also consistent with opposite signals from the Euro. But increased geopolitical tensions have catapulted the gold price because of equally powerful safe-haven investment demand. Much depends on the next week or two.

S+P 500

The S+P 500 breakdowns threaten a major decline, in the wake of triggered sell divergence at the apex. But partial recovery is in process as dichotomy in the markets continue to lurk in burgeoning commodity prices such as oil, for instance. In the recovery process the sell divergence has turned into a new buy divergence as the oscillators turn positive. This has the 200-Day MA on the brink of a breakout (green circle), and equity markets appear to be poised between new lows and new highs. The next week or two will certainly be telling.

To wit, the dollar price of Brent oil roars to a new high in a major dichotomy with financial market declines. This admittedly is as a result of geopolitical eruption in the Russian – Ukraine fiasco causing an oil shortage scare, but nevertheless a near impossibility in collapsing financial markets.

US Treasuries

US Treasury 10 year yield holds the broad strengthening bias with a reversal up from recent weakness, in a precursor towards yet higher yields. This means Treasury values in recent strength start to decrease again as equities continue their revival. We seem to still be in the mode of equity and Treasury values inversely correlated before the mould ruptures and both equities and bonds either rise or fall in positive correlation.

The Treasury yield and gold comparison chart illustrates yield in rising mode and gold likewise in rising mode. This therefore represents a continued breakdown of the correct historic inverse correlation of these two elements, which began about Jun 2021.

Just a reminder how the relationship between Treasury yield and the dollar price of gold is traditionally inversely correlated, and how since Jun 2021, it has gone haywire because of central bank mismanagement and accentuated now with increased geopolitical tensions and increased safe-haven asset requirements.

US Dollar

The rampant dollar continues to edge up to new highs, supported by US Treasury yield positive bias and the resultant US Fed intended rate hikes this year. But in the process sell divergence is created by the somewhat weaker oscillator trend and this should result in a weaker dollar trend in due course. The Russian invasion in Ukraine adds to the already strong support for the dollar.

EuroDollar

The Euro is a virtual opposite of the dollar and it achieved new lows which in the process created buy divergence with the somewhat more elevated oscillator trend. Rampant dollar, gold, oil, and the Russian war threat continues to undermine Euro strength.

South African Rand

The Rand is set to weaken as the DollarRand looks like it could breakout to higher levels. There is already a mini-breakout in the currency pair, and only a reversal of Russian war-mongering in Ukraine would lead to a weaker dollar and stronger Rand.

Gold

Gold spikes up through a number of breakouts in the glow of increased geopolitics which has driven safe-haven investment demand. But it may have already peaked and once it reverses it does so rapidly. US miners are in somewhat subdued support and have created bearish patterns in the process. Also, to expect any bearish influence from increased US Treasury yields we will need first to move completely through this period of increased hostile geopolitics.

Hui : Gold Ratio

The HUI – gold ratio rises to subdued breakouts within bearish formations of flag and wedge which is likely to project forward in lower values rather than higher.

GDX US Gold ETF

GDX, like the earlier HUI – Gold ratio, also rises to subdued breakouts within bearish formations of flag and wedge which is likely to project forward in lower values rather than higher. One of the additional reasons for this is the non-confirmation between GDX Juniors and GDX majors explained in the next chart.

GDX Juniors has a similar chart to GDX majors except in not achieving a new high after the previous high in Nov 2021, which GDX majors achieved. This creates a non-confirmation between the two with reasonably strong bearish implications.

Silver

Another non-confirmation with bearish implications is between silver and gold. Silver does not achieve a new high above the high of Jun 2021 which gold does, pointedly. Silver only achieves mild breakouts within what could be a bear flag.

Gold : Silver Ratio

The gold : Silver ratio closes lower as it drifts sideways to down in reflecting the higher gold price. This is a strong gold breakout but the ratio does not break down, as one would expect in a higher metal prices environment.

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Market Analysis 1 Feb 2022

Feb 1st, 2022 No comments

Executive summary

US equities continue to validate the earlier breakdowns and continue to threaten major declines, in the wake of the triggered technical sell signals. But partial recovery is in process as dichotomy in the markets continue to lurk. For instance, oil powers ahead to new highs, and penetration of 200-day equity moving averages are invalidated. This suggests that equities could start testing resistance levels again as investor euphoria remains ever strong.

US Treasury 10 year yield holds the major breakout level and continues to be the precursor towards higher yields and the trend towards higher interest rates. Treasury yields represent a strong rising trend setup which are likely to ignite further yield increases as the period of higher interest rates gathers momentum, and this will have an inevitable effect on the full gambit of all markets including oil and gold.

The US Federal Reserve confirmed last week that there will be a rate hike in Mar 2022. This resulted initially in the dollar increasing to a new high and gold declining. Thereafter the dollar turned down abruptly which could signal the start of a weakening phase, and this is supported by the development of sell divergence which converted from the earlier reverse buy divergence. This is also consistent with opposite signals from the Euro. It could also mean gold will weaken first followed by strength during the dollar weakening phase.

S+P 500

The S+P 500 breakdown holds and continues to threaten a major decline, in the wake of the triggered sell divergence. But partial recovery is in process as dichotomy in the markets continue to lurk. For instance, oil powers ahead to new highs, and the S+P 500 invalidates penetration of the 200-day MA (green). This suggests that equities could start testing resistance levels again as investor euphoria remains ever strong.

To wit, the dollar price of Brent oil roars to a new high in a major dichotomy with financial market declines. The oil price chart setup also looks particularly bullish which suggests even higher new highs, an impossibility in collapsing financial markets.

US Treasuries

US Treasury 10 year yield holds the major breakout level and continues to be the precursor towards higher yields and the trend towards higher interest rates. Treasury values therefore continue to edge lower although US equities are in semi-recovery after initial declines. We seem to still be in the mode of equity and Treasury values inversely correlated before the mould ruptures and both equities and bonds decline together in a real bear market. But higher interest rates are coming which will have an inevitable effect on all markets.

The Treasury yield and gold comparison chart illustrates yield in rising mode and gold in sideways mode, although in decline this past week. This represents a breakdown of the correct historic inverse correlation of these two elements. If gold were to now be at the start of a decline phase, which seems likely, it could herald the start of correcting this breakdown towards the historic relationship of inverse correlation between the two elements.

US Dollar

The dollar achieved a new high before abruptly turning down which could signal the start of a weakening phase. This is supported by the development of sell divergence which converted from the earlier reverse buy divergence. Reverse buy divergence typically should mean one more new high followed by a weakening phase, and it would appear to be happening. This is also consistent with opposite signals from the Euro. It could also mean gold will weaken first followed by strength during the dollar weakening phase.

EuroDollar

The Euro is a virtual opposite of the dollar and achieved a new low before abruptly turning up which could signal the start of a strengthening phase. This also is supported by the development of buy divergence which converted from the earlier reverse sell divergence. Reverse sell divergence typically should mean one more new low followed by a strengthening phase, and it would appear to be happening.

South African Rand

The Rand is set to weaken in a breakout to a new high in the Dollar Rand chart as the reverse buy divergence exerts influence. Unlike the dollar index and the Euro, the Dollar Rand has not converted to sell divergence and therefore seems to be out on a limb.

Gold

Gold declines abruptly from strong resistance, but is still in an area of decision as price approaches the triangle apex. However, it is not supported by US miners which could drag gold lower, and other strong impact factors are also influencing gold lower such as Treasury yield strength, a strengthening dollar, and silver which is leading gold lower.

Hui : Gold Ratio

The HUI – gold ratio is moving sideways to down within the overall negative bias. In the process it has a tentative breakdown of the bear flag which has been invalidated, but the overall drift sideways reflects gold’s area of decision as price approaches the triangle apex.

GDX US Gold ETF

GDX, by contrast, has a breakdown of the bear flag on increased volume, and the partial recovery looks like it could develop into a ‘kiss goodbye’. This intensifies the negative bias and could herald lower miner as well as gold prices ahead.

Silver

Silver has a strong breakdown from the rising wedge as it leads gold lower, which indicates yet lower prices ahead.

Gold : Silver Ratio

The gold:silver ratio has another breakout as it ratchets higher above 80, as silver leads gold lower. This all indicates lower precious metal prices ahead.

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Market Analysis 25 Jan 2022

Jan 25th, 2022 No comments

Executive summary

US equities decline sharply in more than doubling the declines since the peak in the market, including finally triggering certain technical sell signals. Peculiarly though, certain other markets continue undeterred, such as oil and gold, and it might be that although structural and endemic problems in the market remain camouflaged they may well remain so longer in delaying the final cataclysmic break point until later, perhaps even into 2023.


US Treasury 10 year yield holds the major breakout level and continues to be the precursor towards higher yields and the trend towards higher interest rates. Treasury yields represent a strong rising trend setup which are likely to ignite further yield increases as the period of higher interest rates gathers momentum, and this will have an inevitable effect on the full gambit of all markets including oil and gold.


The dollar still looks like a breakout to higher levels as certain chart patterns play out which could mean one more new high followed by a weakening phase, which is consistent with signals from competing currencies notably the Euro. It could also mean gold will weaken first followed by strength during the dollar weakening phase.

S+P 500

The S+P 500 breakdown through the rising channel formation signals major decline prospects as the sell divergence kicks in, propelling prices much lower. This, in the past week, more than doubles declines since the peak in the market, including finally penetrating the 200-Day MA (green).

Brent Oil

The oil price has surprisingly held at elevated levels in a major dichotomy with financial markets.

US Treasuries

US Treasury 10 year yield holds the major breakout level and continues to be the precursor towards higher yields and the trend towards higher interest rates. Although Treasury values are advancing as US equities decline, and if equities decline further and even much further then this could have the effect of reducing Treasury yields, until the mould ruptures and both equities and bonds decline together. But Treasury yields represent a strong rising trend setup which are likely to ignite further yield increases as the period of higher interest rates gathers momentum, and this will have an inevitable effect on the full gambit of all markets such as oil and gold which at the moment seem to be drifting sideways to up.

The Treasury yield and gold comparison chart illustrates yield rising and gold up to sideways, which maintains the breakdown of the correct historic inverse correlation of these two elements. The yield rise is striking while the Gold decline is nowhere evident as yet. At some point the correct historic inverse correlation logic will reassert itself and become evident. Until that happens markets will remain ‘artificial’ in continuing to camouflage the endemic problems brought about by central bank mismanagement.

US Dollar

The dollar still looks like a breakout to higher levels as the reverse buy divergence exerts influence. Reverse buy divergence typically could mean one more new high followed by a weakening phase, and this is consistent with signals from competing currencies notably the Euro. It could also mean gold will weaken first followed by strength during the dollar weakening phase.

EuroDollar

The Euro is a virtual opposite to the dollar and still looks like a breakdown to lower levels as a new reverse sell divergence develops. Reverse sell divergence typically could mean one more new low followed by a strengthening phase.

South African Rand

The Rand is set to weaken in a breakout to a new high in the Dollar Rand chart as the reverse buy divergence exerts influence. As with the dollar index, reverse divergence could mean one more new high before dollar weakness sets in to Rand strength thereafter.

Gold

Gold edges up through strong resistance (dark blue), but is still in an area of decision as it approaches the triangle apex. However, it is not supported by US miners which could drag gold lower, and other strong impact factors are also influencing gold lower such as Treasury yield strength, a strengthening dollar, and silver which is leading gold lower.

Hui : Gold Ratio

The HUI – gold ratio declines sharply within the bear flag with a tentative breakdown, as it intensifies the negative bias. This indicates lower gold ahead.

GDX US Gold ETF

Like the HUIgold ratio, GDX also declines sharply within the bear flag as it intensifies the negative bias. This also indicates lower gold ahead.

Silver

Silver maintains its negative bias as it drifts sideways to down. Price drops sharply in the latter part of the week as siver starts to lead gold lower.

Gold : Silver Ratio

The gold:silver ratio ratchets up 4.5% from the low during the week as silver begins to lead gold lower. This indicates lower metal prices to come.

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Market Analysis 18 Jan 2022

Jan 18th, 2022 No comments

Executive summary

US equities are still in correction mode down in the wake of supporting market signals, but continue nevertheless to maintain a slight upward bias. Most of the parameters are in place for the decline to continue but as long as the upward bias is maintained so too does the bull trend. The structural and endemic problems in the market remain camouflaged which will probably delay the cataclysmic break point until later, perhaps even into 2023.


US Treasury 10 year yield holds the breakout of last week which represents the precursor towards higher yields and the trend towards higher interest rates. This is likely to ignite further yield increases as the period of higher interest rates gathers momentum, with inevitable effects on the full gambit of all markets which at the moment seem to be drifting sideways in limbo.


The dollar still looks like a breakout to higher levels as certain chart patterns play out which could mean one more new high followed by a weakening phase, which is consistent with signals from competing currencies notably the Euro. It could also mean gold will weaken first followed by strength during the dollar weakening phase.

S+P 500

The S+P 500 is still in correction mode down in the wake of sell divergence, but it continues to hold above the bottom of the rising channel. Most of the parameters are in place for the decline to continue but as long as the rising channel remains in place so too does the bull trend which incidentally continues to move ahead well above the 200-day MA (green) which becomes the next defensive line to be breached.

The short term 3 month chart not only illustrates the decline from the sell divergence but also continued maintenance of the bullish shape in the chart of higher highs and higher lows. This might therefore represent a continuation of the bull trend in further delaying any more serious decline until later.

US Treasuries

US Treasury 10 year yield holds the breakout of last week which represents the precursor towards higher yields and the trend towards higher interest rates. Higher yield means that Treasury values are declining as US equities continue to correct down. This strong rising trend setup will ignite further yield increases as the period of higher interest rates gathers momentum, with inevitable effects on the full gambit of all markets which at the moment seem to be drifting sideways in limbo.

The Treasury yield and gold comparison chart illustrates yield rising and gold sideways, which maintains the breakdown of the correct historic inverse correlation of these two elements. The yield rise is striking while the Gold decline is stodgy, and the yield rising channel is obvious whilst the gold channel is nowhere near a declining channel yet. At some point the correct historic inverse correlation logic will reassert itself and become evident. Until that happens markets will remain ‘artificial’ in continuing to camouflage the endemic problems brought about by central bank mismanagement.

US Dollar

The dollar still looks like a breakout to higher levels as a new reverse buy divergence develops. Reverse buy divergence typically could mean one more new high followed by a weakening phase, and this is consistent with signals from competing currencies notably the Euro. It could also mean gold will weaken first followed by strength during the dollar weakening phase.

EuroDollar

The Euro is a virtual opposite to the dollar and still looks like a breakdown to lower levels as a new reverse sell divergence develops. Reverse sell divergence typically could mean one more new low followed by a strengthening phase.

South African Rand

The Rand is set to weaken in a breakout to a new high in the Dollar Rand chart as a new reverse buy divergence develops. As with the dollar, reverse divergence could mean one more new high before dollar weakness sets in to Rand strength thereafter.

Gold

Gold continues to edge toward decision time as it continues sideways towards the triangle apex. It seems to be hemmed in by a band of strong resistance (dark blue) and in accordance with dollar analysis is likely to breakdown first before recovering in a strength phase while the dollar weakens. Key break levels are there and they are evident on the chart at the red and blue markers. There is little support from US miners at the moment as they too move sideways.

Hui : Gold Ratio

The HUI – gold ratio continues to zig-zag sideways although with a negative bias, reflecting gold’s sideways indecision.

GDX US Gold ETF

Like the HUIgold ratio, GDX also continues to zig-zag sideways also with a negative bias, reflecting gold’s sideways indecision.

Silver

Silver maintains its negative bias as it drifts sideways to down. The earlier breakdowns are holding but silver is not leading gold at the moment, and seems to be in limbo as most markets are.

Gold : Silver Ratio

The gold:silver ratio breakouts hold as the ratio moves sideways in limbo. The ratio closed slightly lower which reflects market sentiments at the moment.

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Market Analysis 11 Jan 2022

Jan 11th, 2022 No comments

Executive summary

US equities correct down and most of the parameters are in place for the decline to continue. But there are chart indications also that indicate that if certain parameters are not breached then the bull trend will continue for now. The structural and endemic problems in the market remain camouflaged which will probably delay the cataclysmic break point until later, perhaps even into 2023.

US Treasury 10 year yield has a powerful breakout through the major high of Mar 2021 which now resembles a strong rising trend setup which will ignite further yield increases as the period of higher interest rates gathers momentum. This should provide additional impetus to an equity breakdown, stronger dollar, and gold weakness.

The dollar still looks like a breakout to higher levels as certain chart patterns play out. But dollar increases of 7.5% already plus further increases will move closer to an inevitable reversal and the onset of a dollar weakness phase. Gold is set to decline in the short term followed by gold strength once the dollar weakens.

S+P 500

The S+P 500 corrects down as the sell divergence bites, but the decline remains within the confines of the rising channel as it resists breaching the bottom support line. Most of the parameters are in place for the decline to continue but as long as the rising channel remains in place so too does the bull trend which incidentally continues to move ahead above the 200-day MA (green) which becomes the next defensive line to be breached.

The short term 3 month chart not only illustrates the decline from the sell divergence but also the ending bullish Hammer candle which is supportive of a price reversal up. The chart in correcting down might therefore also be the start of a reversal up and a continuation of the bull trend.

US Treasuries

US Treasury 10 year yield has a powerful breakout through the major high of Mar 2021 which now resembles a strong rising trend setup which will ignite further yield increases as the period of higher interest rates gathers momentum. This should provide additional impetus to an equity breakdown, stronger dollar, and gold weakness.

The Treasury yield and gold comparison chart illustrates yield rising and gold declining, in accordance with the correct historic inverse correlation of these two elements. Although the yield rise is striking while the Gold decline is stodgy, and the yield rising channel is obvious whilst the gold channel is nowhere near a declining channel yet. At some point the correct historic inverse correlation logic will reassert itself and become evident. Until that happens markets will remain ‘artificial’ in continuing to camouflage the endemic problems brought about by central bank mismanagement.

US Dollar

The dollar still looks like a breakout to higher levels as the 18 month ‘Cup and Handle’ plays out, including a number of inverted H&S as well. But the dollar increases since Jun 2021 already amount to 7.5% and further increases move closer to an inevitable reversal and the onset of a dollar weakness phase.

EuroDollar

The Euro is a virtual opposite to the dollar still looks like a breakdown to lower levels as the inverted ‘Cup and Handle’ plays out, including a number of H&S as well. But declines over the past year are already close to 8% and further decreases move closer to an inevitable reversal and the onset of a Euro strength phase.

South African Rand

The Rand is strengthening against the dollar into a developing dollar bull flag which is set to weaken the Rand as the ‘Çup and Handle’ reactivates, also including a number inverted H&S. This is of course all very dollar dependent.

Gold

Gold edges toward decision time as it moves consistently sideways towards the triangle apex. Both the support and resistance zones have been effective over the past 6 months and a break either way is probable soon. Key break levels are there and they are evident on the chart at the red and blue markers. There is little supporting evidence from US miners at the moment as to the break direction, but US Treasury yields and the dollar point towards gold weakness in the short term followed by gold strength once the dollar weakens.

Hui : Gold Ratio

The HUI – gold ratio continues to zig-zag sideways although with a negative bias, reflecting gold’s sideways indecision.

GDX US Gold ETF

Like the HUIgold ratio, GDX also continues to zig-zag sideways although with a negative bias, reflecting gold’s sideways indecision.

Silver

Silver is still in decline mode in the wake of sell divergence and breakdowns. It continues to lead gold lower which is bearish, and this should produce yet lower precious metal and miner prices.

Gold : Silver Ratio

The gold:silver ratio breakouts are valid as the ratio closes higher again at 80.08 to maintain its upward bias. Ratio increases reflect metal price declines as silver continues to lead gold lower. The chart is building to a powerful rising trend setup that looks likely to another breakout and yet lower metal prices.

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Market Analysis 4 Jan 2022

Jan 4th, 2022 No comments

Executive summary

US equities hold at elevated levels in forming a rising trend setup that should yield new highs, as the bull trend continues to power ahead. This now registers a 30% gain in the last 12 months supported by continued euphoric investor sentiment in setting new historic levels that defy reason in virtually every respect. Obviously corrective downturns will occur and another sell divergence has developed in the chart which will assist in powering the next such correction. The rising channel extends out into the future and this could be a good guide as to the severity of corrections that may or may not breakdown below the supporting trendline. The structural and endemic problems in the market remain camouflaged which will probably delay the cataclysmic break point until later, perhaps even into 2023.


US Treasury 10 year yield extends the breakout in spiking up as the Treasury value reduces in line with the equity advance. Resistance could be tested next and any break through will be very bullish because it could then test the previous high of 9 months ago, which if successful, will be particularly bullish in igniting further yield increases providing additional impetus to an equity breakdown, stronger dollar, and gold weakness.


The dollar still looks like a breakout to higher levels, although perhaps with more dollar weakness first. This is supported by fundamental economic comparison between the EU (very weak) and the US (very strong). This is also consistent with a completed countertrend rally in gold price, which should also now start declining.

S+P 500

The S+P 500 holds at elevated levels as it forms a rising trend setup that should yield new highs, as the bull trend continues to power ahead. This now registers a 30% gain in the last 12 months supported by continued euphoric investor sentiment in setting new historic levels that defy reason in virtually every respect. Obviously corrective downturns will occur and another sell divergence has developed in the chart which will assist in powering the next such correction. The rising channel extends out into the future and this could be a good guide as to the severity of corrections that may or may not breakdown below the supporting trendline.

The short term 3 month chart illustrates the powerful rising trend setup, sell divergence, and rising channel in more detail.

US Treasuries

US Treasury 10 year yield extends the breakout from the reducing wedge in spiking up as the Treasury value reduces in line with the equity advance. Resistance could be tested next and any break through will be very bullish because it could then test the previous high of 9 months ago, which if successful, will be particularly bullish in igniting further yield increases providing additional impetus to an equity breakdown, stronger dollar, and gold weakness.

The Treasury yield and gold comparison chart illustrates yield rising and gold declining, in accordance with the correct historic inverse correlation of these two elements. But movement is tiny and Gold is still nowhere near a declining channel against the upward sloping yield channel. At some point the correct historic inverse correlation logic will reassert itself and become evident. Until that happens markets will remain ‘artificial’ in continuing to camouflage the endemic problems brought about by central bank mismanagement.

US Dollar

The dollar still looks like a breakout to higher levels as the 18 month ‘Cup and Handle’ plays out, after triggering in Nov 2021. It may of course only play out after more dollar weakness first. There are also numerous inverted H&S patterns in support of the Cup and Handle, and dollar strength is further supported by fundamental economic comparison between the EU (very weak) and the US (very strong). The RSI oscillator in the chart has moved down from overbought levels which should assist any dollar breakout. This is also consistent with a completed countertrend rally in gold price, which should also now start declining.

EuroDollar

The US dollar index is made up of 58% Euro and 42% other currencies, and therefore the Euro is a virtual opposite and still looks like a breakdown to lower levels as the ‘Cup and Handle’ plays out. It may also of course only play out after more Euro strength first, and is further driven by fundamental economic comparison between the EU (very weak) and the US (very strong).

South African Rand

The Rand weakened this week against a stronger dollar in a continued dollar rising channel powered by the bullish cap and handle formation which triggered in late Nov 2021, plus numerous H&S formations. This is of course all very dollar dependent.

Gold

The Gold chart illustrates an interesting setup in that gold looks like it is repeating what it did exactly a year ago. At both year ends, then and now, there was a small-volume rally into year end followed by a 14% decline into 1st quarter 2021. This was also experienced in the oscillators and US miners, which makes gold now look bearish. Expect a gold decline into 1st quarter 2022, as this is also consistent with rising US Treasury yields and US dollar.

Hui : Gold Ratio

The HUI – gold ratio is zig-zagging sideways but blipped down from the top of the ending rising wedge. If the ratio follows gold it is likely to spike down in 1st quarter 2022 as it did in 1st quarter 2021.

GDX US Gold ETF

Like the HUIgold ratio, GDX also blipped down from the top of the ending rising wedge and if it too follows gold (as it must if the HuiGold ratio does) it is likely to spike down in 1st quarter 2022 as it did in 1st quarter 2021.

Silver

Silver still in decline mode in the wake of sell divergence and bear flag activation. It continues to lead gold lower which is bearish, and this should produce yet lower precious metal and miner prices. The ending rising wedge is starting to break down.

Gold : Silver Ratio

The ratio has a 2nd breakout as it closes higher with silver leading gold lower, ever closer to the peak just over 82. A higher ratio reflects metal price declines, and the chart is building to a powerful rising trend setup that looks likely to another breakout.

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Market Analysis 20 Dec 2021

Dec 21st, 2021 No comments

Executive summary

US equity decline gathers momentum and is set to continue declining, after a probable interim reaction up. The technical patterns are still intact though and until these are breached on the downside the elevated levels will be maintained by continued euphoric investor sentiment in a bull trend that will continue advancing into the future. The structural and endemic problems in the market remain camouflaged which will probably delay the cataclysmic break point until later, perhaps even much later.

US Treasury 10 year yield maintains a minor slow weakening as it essentially moves sideways in chart that remains bullish. It is likely to break above the previous high of 9 months ago which will ignite further yield increases providing additional impetus to an equity breakdown, including gold weakness. At the moment Treasury values therefore advance slightly as US equities decline.

The earlier forecast to the start of a probable dollar weakness phase is rapidly being replaced by a continued strength phase powered by the bullish signals. This is supported fundamentally by comparing the economically weaker EU against the US, and is also consistent with a completed countertrend rally in gold which should now start declining. This is supported by continued weak US miners plus a now stronger dollar forecast.

S+P 500

The S+P 500 decline gathers momentum and is set to continue declining, after a probable interim reaction up. The rising channel pattern is still intact though and until this is breached on the downside the elevated levels will be maintained by continued euphoric investor sentiment in a bull trend that will continue advancing into the future.

The short term 3 month chart illustrates the pressure build-up in a triple top with higher volume in the current decline compared with the previous (middle top). Technically price is still only straddling the 50-day MA (red) with the 200-day MA (green) another 5% lower down at 4331.

Brent oil

Oil continues to mimic US equities except that price has declined further and penetrated the 200-Day MA (green), as it too gathers decline momentum.

US Treasuries

US Treasury 10 year yield maintains a slow weakening as it fashions a zig-zag pattern in the reducing wedge formation. This remains bullish though and is likely to break to the upside in due course. Any breakout above the previous high of 9 months ago will be particularly bullish in igniting further yield increases providing additional impetus to an equity breakdown, including gold weakness. At the moment Treasury values therefore advance slightly as US equities decline.

The Treasury yield and gold comparison chart illustrates yield and gold essentially moving sideways as a continued contra-indication of the historic inverse correlation of these two elements moving in opposite directions. Gold is still nowhere near a declining channel against the yield upward slanting expanding wedge. At some point logic will reassert itself in a rising yield channel and declining gold channel. Until that happens markets will remain ‘artificial’ in continuing to camouflage the endemic problems brought about by central bank mismanagement.

US Dollar

The earlier forecast to the start of a probable US$ weakness phase is rapidly being replaced by a continued strength phase in a continued rising channel powered by the bullish cap and handle formation which triggered in late Nov 2021, plus numerous H&S formations. This is supported by fundamental economic comparison between the EU (very weak) and the US (very strong). The RSI oscillator in the chart has moved down from overbought levels which should assist any dollar breakout. This is also consistent with a completed countertrend rally in gold price, which should also now start declining.

EuroDollar

Likewise, the earlier forecast to the start of a probable EuroDollar strength phase is rapidly being replaced by a continued weakness phase in a continued reducing channel powered by the bearish inverted cap and handle formation which triggered in Oct/Nov 2021, plus numerous inverted H&S formations. This is also of course supported by fundamental economic comparison between the EU (very weak) and the US (very strong). The RSI oscillator in the chart has moved up from oversold levels which should assist any EuroDollar breakdown.

South African Rand

Likewise, the earlier forecast to the start of a probable Rand strength phase is rapidly being replaced by a continued weakness phase in a continued dollar rising channel powered by the bullish cap and handle formation which triggered in late Nov 2021, plus numerous H&S formations. This is of course all very dollar dependent.

Gold

Gold ‘blipped’ up momentarily before reacting down from the region of strong resistance (black circle). It is now in an area of decision to either breakout or breakdown. But, continued weak US miners plus a now stronger dollar forecast is likely to push gold into further declines, give or take any short term counter moves.

Hui : Gold Ratio

The HUI – gold ratio is still in decline mode in the wake of multiple sell divergence and bear flag activation. More weakness is likely to follow because of this which in turn promises yet lower gold.

GDX US Gold ETF

Like the HUIgold ratio, the GDX is in decline mode in the wake of sell divergence and bear flag activation, with more weakness likely to follow, which in turn promises yet lower gold.

Silver

Silver still in decline mode in the wake of sell divergence and bear flag activation. It continues to lead gold lower which is bearish, and this should produce yet lower precious metal and miner prices.

Gold : Silver Ratio

The ratio breakout extends to yet a higher close, just short of the previous high at about 81.5, because silver is leading gold lower. A higher ratio indicates yet lower metal prices to come.

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Market Analysis 13 Dec 2021

Dec 14th, 2021 No comments

Executive summary

US equities are poised for potential declines having virtually fully recovered the earlier decline off the peak. It continues to hold at elevated levels despite negative support characteristics in continued euphoric investor sentiment with narrow breadth in negative advance/decline ratios. But this has already prevailed for a long time now and the bull trend could continue advancing into the future. The structural and endemic problems in the market remain camouflaged which will probably delay the cataclysmic break point until later, perhaps even much later.

US Treasury 10 year yield starts to weaken again as it continues to maintain the upward bias. But the chart remains bullish and it is only a matter of time before a breakout above the previous high of 9 months ago. Any breakout through resistance levels will ignite further yield increases and provide additional impetus to a corrective equity breakdown including gold weakness.

The US$ declines from the recent peak ever so slowly, which is delaying the probable start of a weakness phase. This would be consistent with a countertrend rally in the gold price, although precious metal miners are poised to decline further which is bearish gold.

S+P 500

The S+P 500 is poised for potential declines having virtually fully recovered the earlier decline off the peak. It continues to hold at elevated levels despite negative support characteristics in continued euphoric investor sentiment with narrow breadth in negative advance/decline ratios. But this has already prevailed for a long time now and whilst the rising channel pattern is not breached on the downside the bull trend will continue advancing into the future.

Brent oil

Even the oil price continues to mimic US equities although recovery from initial declines has seemingly stalled. The oil market is therefore less bullish than US equities, as it continues in the rising channel formation for now.

US Treasuries

US Treasury 10 year yield starts to weaken again as it fashions a zig-zag pattern in a reducing wedge. But the chart remains bullish in maintaining the upward bias, and it is only a matter of time before a breakout above the previous high of 9 months ago. US Treasuries therefore now start to advance again with US equity strength. Any breakout through resistance levels will ignite further yield increases and provide additional impetus to a corrective equity breakdown including gold weakness.

The Treasury yield and gold comparison chart illustrates gold rising slightly to match the slight Treasury yield decline, to maintain the logic of the inverse correlation between the two. But the overall view is still that of rising yield and rising gold which still represents a breakdown of that logic, which will at some point reassert itself in a rising yield channel and declining gold channel. Until that happens markets will remain ‘artificial’ in continuing to camouflage the endemic problems brought about by central bank mismanagement.

US Dollar

The US$ declines from the recent peak ever so slowly, which is delaying the probable start of a weakness phase. In spite of this the MACD creates a sell signal from a more overbought level than it did in Apr 2021 which prompted at that stage a 4.25% decline in the dollar. This would be consistent with a countertrend rally in the gold price, and align with the Euro buy divergence.

EuroDollar

The EuroDollar advances up from the bottom ever so slowly, which delays the probable start of a strength phase in the wake of buy divergence. In spite of this, similar to the dollar, the MACD creates a buy signal from a more oversold level than it did in Apr 2021 which prompted at that stage a 4.75% advance in the Euro. This also would be compatible with a potential countertrend rally in the gold price.

South African Rand

The Rand strengthens ever so slowly from extreme weakness in the wake of the dollar peaking. This is nevertheless a probable start to a strengthening phase against the dollar, although very dollar dependent.

Gold

The gold breakdown from the bear flag has stalled, and could now correct up towards the region of strong resistance in the $1820-1840 range. But technically everything indicates more weakness boosted by weak US miners, stronger Treasury yield, and silver leading gold lower.

Hui : Gold Ratio

The HUI – gold ratio is in decline mode in the wake of multiple sell divergence and bear flag activation. More weakness is likely to follow because of this which in turn promises yet lower gold.

GDX US Gold ETF

Like the HUIgold ratio, the GDX is in decline mode in the wake of sell divergence and bear flag activation, with more weakness likely to follow, which in turn promises yet lower gold.

Silver

Silver leads gold lower which is bearish, and is in decline mode in the wake of sell divergence and bear flag activation which should produce yet lower precious metal and miner prices.

Gold : Silver Ratio

The ratio breakout extends to yet a higher close, just short of the previous high at about 81.5, because silver is leading gold lower. A higher ratio indicates yet lower metal prices to come.

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Market Analysis 6 Dec 2021

Dec 7th, 2021 No comments

Executive summary

US equities are in decline with a correction in progress in an overheated market, which could intensify from here. But the extent of the decline remains to be seen, before the bull trend continues advancing into the future. For now the structural and endemic problems in the market remain camouflaged which will probably delay the cataclysmic break point until later, perhaps even much later.


US Treasury 10 year yield starts to strengthen again as it continues to maintain the upward bias. The uptrend remains in place in a chart structure that remains bullish, and it is only a matter of time before a breakout above the previous high of 9 months ago. US Treasuries therefore now start to decline again with US equity weakness. Any breakout will ignite further yield increases and provide additional impetus to a corrective equity breakdown including gold weakness.
The US$ recovers partially in its decline down from the top, which delays the probable start of a weakness phase. Dollar weakness now is consistent with a countertrend rally in gold, although precious metals and miners are poised to decline further.


So, markets are somewhat contradictory at the moment with shrouded and unexpected outcomes.

S+P 500

The S+P 500 is in decline and it looks like it could intensify from here. But the overall rising channel pattern still continues for now, and it remains to be seen whether the correction breaches the lower parameter of the channel before the bull trend continues advancing into the future.

A closer view of the S+P 500 in the 3 month chart illustrates a slight recovery in the decline from the top in the wake of the sell divergence. The correction down should continue to lower levels, but the extent of the decline still remains to be seen.

Brent oil

Even the oil price continues to mimic US equities with a slight recovery visible in the decline, as it continues in the rising channel formation for now.

US Treasuries

US Treasury 10 year yield starts to strengthen again as it straddles the 200-day MA (green), continuing to maintain the upward bias. The uptrend remains in place in a chart structure that remains bullish, and it is only a matter of time before a breakout above the previous high of 9 months ago. US Treasuries therefore now start to decline again with US equity weakness. Any breakout through resistance levels will ignite further yield increases and provide additional impetus to a corrective equity breakdown including gold weakness.

The Treasury yield and gold comparison chart illustrates gold only declining slightly against yield starting to strengthen again. Historically they move in opposite directions and the yield upward bias is not as yet balanced by a declining gold bias which at best still has a rising channel. While the forecast is for rising yields it presupposes declining gold, if the historic inverse correlation is to be restored.

US Dollar

The US$ recovers partially in its decline down from the top, which delays the probable start of a weakness phase. In spite of this the MACD creates a sell signal from a more overbought level than it did in Apr 2021 which prompted at that stage a 4.25% decline in the dollar. This would be consistent with a countertrend rally in the gold price, and align with the Euro buy divergence.

EuroDollar

The EuroDollar declines partially in its advance up from the bottom, which delays the probable start of a strength phase. In spite of this, similar to the dollar, the MACD creates a buy signal from a more oversold level than it did in Apr 2021 which prompted at that stage a 4.75% advance in the Euro. This also would be compatible with a countertrend rally in the gold price, and align with the Euro buy divergence.

South African Rand

The Rand stalls in correcting slightly against the dollar from extreme weakness, in the wake of the dollar peaking. This is nevertheless a probable start to a strengthening phase against the dollar, although very dollar dependent.

Gold

The gold breakdown from the bear flag has stalled, and could now correct up towards the region of strong resistance in the $1820-1840 range. But technically everything indicates more weakness boosted by weak US miners, stronger Treasury yield, and silver leading gold lower.

Hui : Gold Ratio

The HUI – gold ratio is in decline mode in the wake of multiple sell divergence and bear flag activation. More weakness is likely to follow because of this which in turn promises yet lower gold.

GDX US Gold ETF

Like the HUIgold ratio, the GDX is in decline mode in the wake of sell divergence and bear flag activation, with more weakness likely to follow, which in turn promises yet lower gold.

Silver

Silver leads gold lower which is bearish, and is in decline mode in the wake of sell divergence and bear flag activation which should produce yet lower precious metal and miner prices.

Gold : Silver Ratio

The ratio breakout extends to yet a higher close, just short of the previous high at about 81.5, because silver is leading gold lower. A higher ratio indicates yet lower metal prices to come.

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