Market Analysis 26 Oct 2021

Oct 26th, 2021 No comments

Executive summary

US equities breakout to a new high which is likely to advance further as the bull market trend extends. Although a serious correction down can be expected soon before further real advances continue thereafter. The whole US equity picture consequently changes from an ominous top and potential collapse to a more measured advance into the future as the ‘roller-coaster’ continues. This, despite camouflaging the real problem which will emerge when we reach a cataclysmic break point with a broken international monetary system and artificially low interest rates in a world awash with exponential debt.

US Treasury 10 year yield continues to stair-step up with Treasuries continuing to decline as US equities advance. This is the chart pattern that can be expected to hold over the foreseeable future although a correction can be expected soon. Higher yield may influence dollar value to start advancing again and gold to start declining.

The dollar continues to decline slightly but support could be developing and if US equities do in fact correct down seriously this will have the effect of reversing dollar weakness. Gold is advancing but this is contrary to increases in Treasury yields and therefore subject to potential correction, although most other chart indicators point to further increases in gold.

S+P 500

The S+P 500 has a breakout to a new high and is likely to advance further in the wake of the buy divergence. This extends the bull market trend further as the overall rising channel pattern continues. But a serious correction down can be expected soon before further real advances continue thereafter in a more measured advance into the future.

US Treasuries

US Treasury 10 year yield continues to stair-step up with Treasuries continuing to decline as US equities advance. Yield continues to advance as it holds above the 10-day moving average (blue) which is quite steep and therefore a correction can be expected soon. But this is the chart pattern that can be expected to hold over the foreseeable future. Higher yield may also influence dollar value to start advancing again and gold to start declining.

The comparison between Treasury yield and gold illustrates the inverse correlation of old between the two which at the moment reflects a positive correlation which cannot last.

US Dollar

The US$ continues to decline in the wake of sell divergence as it approaches the bottom limit of the rising channel. Support could be developing and if US equities do in fact correct down seriously this will have the effect of a stronger dollar.

EuroDollar

The EuroDollar continues to advance in the wake of the buy divergence but is reaching a region of breaking either way (black circle). Resistance is becoming stronger as value approaches the triangle apex.

South African Rand

The dollar / Rand continues sideways in a zig-zag pattern as it continues to negotiate within the reducing channel. Value is still at the confluence of the MAs with a break either way looming.

Gold

Gold has a breakout from the expanding triangle and for now this is holding. This is contrary to steady increases in Treasury yields as price again approaches the level of strong resistance at about $1840. A bear flag is also developing which could trigger, but most other chart indicators (eg. US$, gold/silver ratio, US miners, etc.) still point to further increases in gold.

Hui : Gold Ratio

The strong rally in the ratio is close to completion in the wake of buy divergence turning back into reverse sell divergence, plus the development of a bear flag which could trigger soon. For now though the breakout is holding.

GDX US Gold ETF

The GDX chart is similar with the strong rally close to completion in the wake of sell divergence, plus the development of a bear flag which could trigger soon. For now though the breakout is holding.

Silver

Silver’s rally is likely close to completion under the influence of sell divergence, but for now the breakout still holds as it continues to develop the bear flag, but most other chart indicators (eg. US$, gold/silver ratio, US miners, etc.) still point to further increases in silver.

Gold : Silver Ratio

The breakdown continues to hold as it declines further which hints at higher metal prices to come.

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Market Analysis 19 Oct 2021

Oct 19th, 2021 No comments

Executive summary

US equities continue to advance and have all but recovered the initial decline from the peak. It is beginning to look like the continuation of the bull trend is likely, and not yet the start of a collapse. Despite all this, another whipsaw decline could be expected before more clarity can be achieved as to eventual outcomes.

US Treasury 10 year yield could be levelling off and developing into some measure of indecisiveness. This has US equities in recovery which is usually accompanied by softer Treasury value and higher yields, which is not happening. Also, it would appear the dollar is starting a weakening phase which is usually the result of lower Treasury yield which has also not started to happen yet, so the markets are certainly at crossroads right now. Consequently, gold looks to be indecisive and could go up or down. US miners are looking bearish whilst the gold / silver ratio has a breakdown which indicates higher metal prices to come. A real concoction of mixed indicators with some commentators forecasting gold higher and some lower.

S+P 500

The S+P 500 continues to advance and has all but recovered the initial decline in the wake of the sell divergence. It is beginning to look like the continuation of the bull trend is likely. In fact buy divergence has now emerged to support higher prices. The market inconsistencies are still there, suggesting the market will again rise to new highs. These include mainly oil (and some other commodities) and Bitcoin for example. You cannot have bull market conditions in a bear market collapse.

The S+P 500 3 month chart illustrates the recovery in more detail, including a new breakout and invalidation of the original breakdown. Despite all this, another whipsaw decline could be expected before more clarity can be achieved as to eventual outcomes.

US Treasuries

US Treasury 10 year yield could be levelling off after 2 breakouts as it holds above the 10-day moving average (blue). The Treasury yield indecisiveness has US equities in recovery which is usually accompanied by softer Treasury value and higher yields, which is not happening. Also, higher equities usually result in a lower dollar which has seemingly now started to happen. Lower dollar values are the result of lower Treasury yield which has also not started to happen yet, so the markets are certainly at crossroads right now.

The comparison between Treasury yield and gold illustrates the inverse correlation between the two which at the moment reflects a sideways move with both Treasuries and gold exhibiting some measure of indecisiveness.

US Dollar

The US$ is turning down as Treasuries start levelling off and equities in recovery. The chart indicates newly created sell divergence which presupposes the start of a weakening phase, and this is equally reflected in the Euro chart (next). This at the same time presupposes a weakening Treasury yield and stronger equities, as well as stronger gold.

EuroDollar

The EuroDollar is starting to turn up in the wake of buy divergence as the dollar starts to turn down. This is also supported by some other currencies, as noted in the USDzar chart next.

South African Rand

The dollar / Rand is moving sideways to down in line with dollar sell divergence, but continues in a zig-zag sideways pattern with a breakdown as the dollar starts to turn down. A breakdown through the converged MAs is in progress.

Gold

Gold is indecisive in line with Treasury yield starting to level off and dollar starting to weaken, plus the gold/silver ratio breaking down to indicate higher metal prices ahead. But US miners are looking bearish: A real concoction of mixed indicators with some commentators forecasting gold higher and some lower.

Hui : Gold Ratio

The strong rally in the ratio should now have ended in the wake of buy divergence turning back into reverse sell divergence. This aligns with a likely weaker gold price.

GDX US Gold ETF

The recent breakout and rally in US miners has topped and reversed down into double reverse sell divergence which should reduce prices and assist in pushing gold lower.

Silver

Silver’s stair step decline is likely to continue under the influence of sell divergence. But, a breakdown and lower gold / silver ratio suggests higher metal prices to come, plus the influence of a weaker dollar.

Gold : Silver Ratio

There is a breakdown of the strong up trend in the ratio which hints at higher metal prices, especially if the breakdown is decisive.

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Market Analysis 12 Oct 2021

Oct 12th, 2021 No comments

Executive summary

US equities continue in breakdown mode and look precarious which could be the start of a collapse. Or will ‘buy the dips’ win. There are also a number of contradictory market signals that suggest the market will again rise to new highs. These include mainly oil (and some other commodities) and Bitcoin for example. You cannot have bull market conditions in a bear market collapse.

US Treasury 10 year yield continues to breakout as Treasuries decline with the equity market looking precarious. Further yield increases look likely which will weaken gold, but could continue to support the dollar which is set to weaken if other forex is considered. So, some degree of dichotomy is set to emerge.

The US$ is still strong in line with rising US Treasury yields, although the next trend is likely down despite the US Fed need to keep the dollar strong to counter rising inflation. Gold declines in line with Treasury yield strength, and this looks set to continue.

S+P 500

The S+P 500 continues in negative mode as it holds the breakdown in the wake of sell divergence. This looks precarious and could be the start of a collapse, or will ‘buy the dips’ win. There are also a number of contradictory market signals that suggest the market will again rise to new highs. These include mainly oil (and some other commodities) and Bitcoin for example. You cannot have bull market conditions in a bear market collapse.

US Treasuries

US Treasury 10 year yield continues to breakout as Treasuries decline with the equity market looking precarious. The chart indicates further yield increases as it breaks up through the moving averages which changes the sideways mode to up. US equity declines are therefore matched by Treasury declines as they continue to move in the same direction which has triggered the stronger dollar. The recent reversal up in gold and miners is sure to now turn weaker as yield strengthens.

The comparison between Treasury yield and gold illustrates the inverse correlation between the two which will weaken the gold market if yields continue to rise.

US Dollar

The US$ is still strong in line with rising US Treasury yields. The next trend is likely down despite the US Fed need to keep the dollar strong to counter rising inflation. The dollar is now overbought and could be reaching the start of a decline phase soon, because some other currencies are beginning to signal buy divergences (such as Euro and ZAR) which will weaken the dollar.

EuroDollar

The EuroDollar is still weak and oversold and is now signalling buy divergence which should soon see the key break line tested. There are a numberof other currencies in this position such as the Swiss Franc, Jap yen, and ZAR.

South African Rand

The dollar / Rand is moving sideways to down in line with dollar sell divergence, but continues in a zig-zag sideways pattern with a potential breakdown in progress. This promises a stronger Rand and weaker dollar, but is seemingly prevented from breaking down by the converging 50-day (red) and 200-day (green) moving averages.

Gold

Gold declines in line with Treasury yield and dollar strength, and looks precarious for further declines especially with a prominent bearish candle. Continued US Treasury yield strength should add impetus to gold weakness.

Brent Crude Oil

This 20 year long term view of the oil price begs the question: Is oil about to breakout? Because, if it does you cannot have equities in a bear market collapse. Perhaps the oil gauge is something to watch carefully.

Hui : Gold Ratio

The recent reversal up in the ratio is due to weaken again in the wake of reverse sell divergence which developed in the rise. This aligns with a likely weaker gold price.

GDX US Gold ETF

The recent reversal up in US miners could be complete with gold likely to weaken in line with US Treasury yield strength. The chart illustrates that the weakening may already have started at the upper limit of the reducing channel.

Silver

The recent reversal up in silver could have topped out in line with US Treasury yield strength. Perhaps the entire precious metals group is due for further declines as the gold / silver ratio (next chart) continues in a strong up trend.

Gold : Silver Ratio

The ratio continues in a strong up trend despite closing lower, and this portends yet lower metal prices.

Bitcoin

Bitcoin is set to rise to new high in a strong 12 month chart which includes a sell divergence at its all-time high (above $65000) and a buy divergence in Jun 2021 (below $30000). If this plays out in this way it becomes the other strong contradictory market signal along with oil. Because, you cannot have equities in a bear market collapse while Bitcoin goes to a new high. Perhaps Bitcoin is something to watch carefully too.

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Market Analysis 30 Sep 2021

Sep 30th, 2021 No comments

Executive summary

US equities continue in breakdown mode and look precarious which could be the start of a strong decline, with every indication of further declines to follow. The US Fed is also now starting to move from dovish to hawkish as the likelihood of a taper begins to materialise which will assist equity declines further. But, as has happened before, there is still potential to reverse up and maintain the bullish trend experienced in previous breakdown declines.

US Treasury 10 year yield breaks up above the grip of the 200-day moving average which has held it in sideways mode for the past 3 months. That break has triggered a number of reversals in the market: US dollar spike, gold dip, etc. This yield strength also passes the acid test with Treasury values and US equities both declining simultaneously.

For the strong dollar and weak gold to reverse Treasury yields will have to weaken, and this all seems unlikely given current circumstances.

Dow

The Dow Jones continues in breakdown mode in the wake of sell divergence. This looks precarious and could be the start of a strong decline. The break is through rising channel 1 as the chart prepares to penetrate rising channel 2 with every indication of further declines to follow. The US Fed is also now starting to move from dovish to hawkish as the likelihood of a taper begins to materialise. This will assist equity declines further but, as has happened before, there is still potential to reverse up and maintain the bullish trend experienced in previous breakdown declines.

The Dow 3 month chart illustrates the start of breakdown preparation for the 2nd plunge to accelerate the decline. There appears to be little support to prevent the start of further declines.

US Treasuries

US Treasury 10 year yield breaks up above the grip of the 200-day moving average (green) which has held it in sideways mode for the past 3 months. US equity declines are therefore matched by Treasury declines as they move in the same direction for the first time in a long time. Higher Treasury yields has triggered a stronger dollar and weaker gold.

The comparison between Treasury yield and gold illustrates the resumption of inverse correlation which reinstates the historical norm between these two elements.

US Dollar

The US$ index powers up in line with rising US Treasury yields, ignoring all earlier technical signals. This is also assisted by risk aversion and the US Fed’s ‘taper tantrum’ and probable increase in likely market volatility. The dollar is now overbought and could be reaching the start of a decline phase soon.

EuroDollar

The EuroDollar powers down in response to dollar strength, ignoring all earlier technical signals. As with other forex the inverse correlation with the dollar indicates the Euro could be reaching the start of a strengthening phase soon.

South African Rand

The Rand weakens in line with dollar strength, but should begin to strengthen again as the dollar weakens in line with divergence. The slightly broader view illustrates the Rand mini-break from the broader reducing channel of continued Rand strength that has lasted more than a year now. These are two conflicting signals as the Rand continues its sideways zig-zag towards a point of eventual diversion, indicated also by the sideways 200-day MA (green).

Gold

Gold declines as US Treasury yield and dollar strengthens. This is likely to continue further but is dependent on Treasury yield movement which could reverse soon.

The slightly broader view in the 2 year chart illustrates the pivot triangle and the still potential gold price move either way. A Treasury yield break either way will cause gold to do the opposite.

Brent Crude Oil

This 20 year long term view of the oil price begs the question: Is oil about to breakout, or is it about to react down from resistance at the top of the declining channel? Because, if US equities collapse then oil cannot breakout, and if equities reverse up and breakout to continue the bull market then oil can breakout. Perhaps the oil gauge is something to watch carefully.

Hui : Gold Ratio

The ratio weakens to a new low, and this should promote gold weakness further. This is a bearish chart and US miners should continue to drag gold lower.

GDX US Gold ETF

US miners decline to new low in support of weaker gold, and this is turn should produce yet lower gold. This is a bearish chart, although oversold, and any recovery is likely to be short term only.

Silver

Silver declines to new low as Treasury yield and the dollar strengthens. The bullishness of last week has evaporated and also created a non-confirmation with gold which has not declined to a new low. This itself is bearish as well as the gold / silver ratio (next chart) which is now signalled yet lower metal prices.

Gold : Silver Ratio

The ratio closes higher indicating yet lower metal prices to come.

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Market Analysis 23 Sep 2021

Sep 23rd, 2021 No comments

Executive summary

US equities are in breakdown mode, with the top indices in confirmation with each other, which could be the start of a strong decline forecast for a long time now. Much depends on US investor euphoria and the ‘buying the dips’ pattern experienced in previous breakdown declines. This could forestall the inevitable for a time but we remain at the forefront of a serious decline.


US Treasury 10 year yield continues to move sideways despite equities breaking down and having no effect on yield, yet. This to some degree passes the acid test with Treasury values at least not increasing as equities decline. But it is still early days.

Indications still point to a weaker dollar over the next number of months although it has not started yet. This would be the logical response to lower Treasury yields which have also not started yet. Once Treasury yields start to decline it would mean higher gold, which may have already started, if silver and the gold / silver ratio are accurate indicators.

Dow

The Dow Jones is in breakdown mode in the wake of the sell divergence and a strong break through the rising channel trendline. This could be the start of a strong decline which has been forecast for a long time now. Much depends on the US equity euphoria and the ‘buying the dips’ pattern experienced in previous breakdown declines.

The Dow 3 month chart illustrates the start of freefall breakdown and the attempt at a snapback rally which may or may not hold off further declines. Support has virtually vanished.

US Treasuries

US Treasury 10 year yield continues to move sideways as it hugs the 200-Day MA (green). Whilst equities are breaking down funds flow into Treasuries are having no effect on yield, yet. This to some degree passes the acid test with Treasury values at least not increasing as equities decline. But it is still early days. Static yields still has the dollar not weakening yet although gold is starting a tepid rally.

The comparison between Treasury yield and gold illustrates sideways yield and the start of a tepid gold rally.

US Dollar

The US$ index is still rallying but the sell divergence should impact soon. The breakdown is still holding although if the key break line is penetrated it will usher in a period of dollar weakness perhaps lasting many months. This implies that Treasury yield will also have softened and boosted the gold rally.

EuroDollar

The EuroDollar is still declining but the buy divergence should impact soon. The breakout is still holding although if the key break line is penetrated it will usher in a period of Euro strength perhaps lasting many months.

South African Rand

The Rand weakens in line with dollar strength, but should begin to strengthen again as the dollar weakens in line with divergence. The slightly broader view illustrates Rand activity within the broader reducing channel of continued Rand strength that has lasted more than a year now.

Gold

Gold starts a tepid rally as Treasury yield moves sideways in limbo and the dollar is set to start weakening. Again, the 12 month gold chart is indicating very little although there is now some evidence of support from US miners.

A slightly broader view in the 2 year chart illustrates the pivot triangle that has developed with the potential of a very bullish breakout (blue) and a very bearish breakdown (red). A Treasury yield break either way will cause gold to do the opposite.

Hui : Gold Ratio

The tepid ratio advance has deteriorated into a sideways to down move leaving it in limbo and looking bearish which should retard any gold strength. The expanding triangle in the tail of the chart is slightly bullish and the GDX chart (next) is even more bullish.

GDX US Gold ETF

Declines over the past 10 weeks have developed into buy divergence and further into compound buy divergence. There is the beginning of a tepid recovery starting that should be boosted by the divergence which in turn will boost gold. Like gold itself, much depends on movement in Treasury yield and dollar value.

Silver

Silver has turned more bullish all of a sudden with the chart reverse sell divergence developing further into buy divergence. This is followed by the start of a tepid recovery which should develop more momentum under the impact of buy divergence. Also, the gold / silver ratio (next) seems to have changed direction ushering in higher metal prices.

Gold : Silver Ratio

The ratio seems to have peaked and in the process developed sell divergence which could now extend the decline that has started. If this is the start of a period of silver outperforming gold with resultant lower ratios then it will also mean higher metal prices.

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Market Analysis 16 Sep 2021

Sep 16th, 2021 No comments

Executive summary

US equities are starting to break down, with the top indices largely in confirmation with each other, which could now develop into a strong decline once the bullish pattern plays out. Much depends on all the interconnected influencing market factors which continue to impact outcomes, principally US Treasury yield, as we remain at the forefront of a serious decline. But there are many conflicting signals at the moment which continue to confuse, with a number of market segments moving sideways in limbo.

US Treasury 10 year yield continues to move sideways while options remain in limbo with the seeming potential to move either way. Treasury value and US equities are moving opposite to one another which represents an acid test failure. If this continues once equities start a more serious decline it means Treasury yield will decline more seriously with implications of lower dollar and higher gold values. But most indications are for lower gold.

Indications point to a weaker dollar over the next number of months which is a logical response to lower Treasury yields. This in turn indicates higher gold but most indications point to lower gold, especially the gold / silver ratio and silver itself.

Dow

There is little change in the Dow Jones status from last week as it continues to start a breakdown in the wake of the sell divergence. This could turn into the strong decline, once the bullish pattern plays out.

The S+P 500 is also now nudging the start of a breakdown in the wake of sell divergence which begins to confirm the Dow Jones shape. The two top US indices are therefore now in accord with one another in pointing towards the start of a serious decline phase.

US Treasuries

US Treasury 10 year yield continues to move sideways in mini-breaks up and down while options remain in limbo. The mini-break down (red circle) reflects a strengthening in Treasury value as US equities start to turn down, which represents an acid test failure with equities and bonds moving in opposite direction. If this continues once equities start a more serious decline it means Treasury yield will test the support zone more seriously with implications of lower dollar and higher gold values.

Treasury yield moving sideways in limbo reflects in gold moving sideways in limbo. Much depends on how Treasury yield responds in the next period, because this is the main driver of investment decisions.

US Dollar

The US$ index continues to weaken as sell divergence continues to impact with the breakdown through the key break line holding good. This indicates a weaker dollar over the next number of months which is a logical response to lower Treasury yields.

EuroDollar

The EuroDollar correction down appears to be complete as it starts to edge stronger with the breakout through the key break line holding good and the influence of the but divergence kicking in. If dollar weakness is next the Euro will start testing resistance again in breaking to higher highs over the next period of months, which includes an inverse head and shoulders beginning to develop.

South African Rand

The Rand weakens slightly despite slight dollar weakness, but should begin to strengthen again as the dollar continues to weaken under the influence of sell divergence.

Gold

Gold is moving sideways in limbo having reacted down from strong resistance. This is in accord with and caused by Treasury yield also moving sideways in limbo. Again, the 12 month gold chart is indicating very little with potential moves either way.

A slightly broader view in the 2 year chart illustrates the pivot triangle that has developed with the potential of a very bullish breakout (blue) and a very bearish breakdown (red). A Treasury yield break either way will cause gold to do the opposite.

Hui : Gold Ratio

The tepid ratio advance has deteriorated into a sideways to up move leaving it in limbo. The chart continues to look bearish which presupposes gold is likely to go down and not up.

GDX US Gold ETF

But the GDX chart in fact looks more bullish in the wake of buy divergence and turning up from a double bottom. Like gold itself, much depends on movement in Treasury yield and dollar value.

Silver

Silver continues to underperform gold in a continually increasing gold/silver ratio, and continues in stair stepdown mode to a potential breakdown of the bear flag. Very bearish.

Gold : Silver Ratio

The strong gold / silver ratio breakout continues to hold, indicating still lower metal prices ahead.

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Market Analysis 9 Sep 2021

Sep 9th, 2021 No comments

Executive summary

The Dow Jones starts to break down but the S+P 500 remains bullish which creates non-confirmation between the top two US indices, as does Dow Theory between the Industrial and Transport Indices. The forecast strong equity decline continues to be expected any time soon, but not just yet it would appear. Much depends on all the interconnected influencing market factors which continue to impact outcomes, principally US Treasury yield. We remain at the forefront of a long-term decline but many contradictory outcomes can still occur before this as the effect of numerous impacts continue to bore in and eventually collapse the structure.


US Treasury 10 year yield continues to strengthen slightly in the face of equities which continue at elevated levels, and various options are in limbo for now. The US dollar appears to be at the end of a brief rally correction after recent weakness with more weakness to follow. Gold reacts down slightly as Treasury yield edges up, with the potential of a strong breakout either way in metals and miners depending of Treasury yields.

Dow

The Dow Jones starts to break down in the wake of sell divergence which could turn into the strong forecast decline, once the bullish pattern plays out.

But the S+P 500 remains bullish, although also with the impact of sell divergence. This therefore creates non-confirmation between the top two US indices as does Dow Theory between the Industrial and Transport Indices. The forecast strong equity decline continues to be expected any time soon, but not just yet it would appear.

US Treasuries

US Treasury 10 year yield continues to strengthen slightly after the mini-break which continues to hold, in the face of equities which continue at elevated levels. The chart appears to leave options in limbo because the semi-bullish appearance is tempered by what could be the development of a bear flag (red arrow) which will eventually lead to lower yield. This would be in perfect accord with lower dollar and higher gold.

Tepid Treasury yield strengthen nevertheless results in tepid gold declines, which maintains the historic correlation between these two elements. Much depends on how Treasury yield responds in the next period, because this is the main driver of investment decisions.

US Dollar

The US$ index edges higher after recent declines, but the breakdown continues to hold indicating the correction up is near completion. The compound sell divergence continues to impact and the dollar is probably soon to start testing support again. This will impact negatively on other currency values especially the Euro.

EuroDollar

The EuroDollar edges lower after recent gains, and further advances could start soon because of the buy divergence. If dollar weakness is next the Euro will start testing resistance again in breaking to higher highs over the next period of months.

South African Rand

The Rand edges up in the wake of dollar sell divergence which is likely to still strengthen further over a period of months. This Rand strength is disproportionate, because it has occurred in a straight line even against recent dollar strength. If dollar weakness is next then further Rand strength will follow, reflected in breaching the key break line of the bear flag.

Gold
Pic Gold 12m

Gold reacts down from strong resistance as Treasury yield edges up, as it once again criss-crosses the 200-Day MA (green). Again, the 12 month gold chart is indicating very little.

But the 2 year gold chart illustrates the pivot triangle that has developed with the potential of a very bullish breakout (blue) and a very bearish breakdown (red). If Treasury yield dose in fact break lower then gold will advance on the bullish diagonal above, and vice versa.

Hui : Gold Ratio

US miners are advancing up into a developing bear flag reflected also in the HUI / Gold ratio. Much depends on Treasury yields and dollar values: If these move up the bear flag will trigger. But if they move down the reducing channel could become a bull flag with strong gains in both gold and miners.

GDX US Gold ETF

But the GDX chart in fact looks bullish after turning up at a double bottom in the wake of buy divergence. The advance of miners up the bear flag has stalled, and may even already have breached the bottom break line. Much depends on Treasury yields and dollar values, as commented for the Hui / Gold ratio, and a break either way will be extensive.

Silver

Silver continues to underperform gold in a continually increasing gold/silver ratio, and has now developed sell divergence with negative implications.

Gold : Silver Ratio

The strong gold / silver ratio breakout continues to hold for now, indicating still lower metal prices ahead.

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Market Analysis 26 Aug 2021

Aug 26th, 2021 No comments

Executive summary

The Dow Jones still looks like it will continue to yet higher new highs in the short term, before the strong bearish patterns trigger severe declines after the bullish pattern plays out. Much depends on all the interconnected influencing market factors which continue to impact outcomes. We remain at the forefront of a long-term decline but many contradictory outcomes can still occur before this as the effect of numerous impacts continue to bore in and eventually collapse the structure.

US Treasury 10 year yield strengthens slightly as US equities hold at elevated levels. But there are indications that yield may in fact start weakening soon which will be in accord with a weaker dollar and gold price strength over the next period of months.

The US$ weakens slightly with indication of further weakness to come which will be caused by Treasury yield weakness. Other forex, especially the Euro will strengthen accordingly. Gold weakens slightly but will start to rally depending on the timing of any Treasury yield weakness, and miners will follow suit.

Dow

The Dow Jones break up through the key break level is holding which indicates yet higher new highs in the short term. Despite breaching this strong trigger point the even stronger bearish patterns remain in place with the compound sell divergence and rising wedges which threaten severe declines once the bullish pattern plays out.

US Dollar

The US$ index edges lower in the wake of sell divergence which could still weaken into a period of months, once the key break line breaches. This also implies that weaker US Treasury yield will be the cause and that gold will consequently strengthen over that same time period. The corollary will of course be strength in other currencies especially the Euro.

EuroDollar

The EuroDollar edges up in the wake of buy divergence which is likely to still strengthen further over a period of months, once the key break line breaches.

South African Rand

The Rand edges up in the wake of dollar sell divergence which is likely to still strengthen further over a period of months, once the key break line breaches.

US Treasuries

US Treasury 10 year yield strengthens into a mini-break in the wake of buy divergence, as US equities hold at elevated levels. This means the acid test fails because bonds and equities are moving in opposite direction. Yield strength over the last month could actually be developing into a bear flag (red arrow), in which case lower yields will follow after the flag activates. This would be in perfect accord with lower dollar and higher gold.

Treasury yield strengthens slightly and gold declines slightly, restoring the historic correlation between these two elements. Much depends on how Treasury yield responds in the next period, because this is the main driver of investment decisions.

Gold

Gold moves down slightly as Treasury yield strengthens slightly. For the rest the 12 month gold chart is indicating very little.

But the 2 year gold chart illustrates the pivot triangle that has developed with the potential of a very bullish breakout (blue) and a very bearish breakdown (red). If Treasury yield dose in fact break lower then gold will advance on the bullish diagonal above, and vice versa.

Hui : Gold Ratio

The HUI / Gold ratio turns down in sympathy with gold in a chart that continues to look bearish, and providing little else in potential future movement.

GDX US Gold ETF

But the GDX chart in fact looks bullish after turning up at a double bottom in the wake of buy divergence.

Silver

Silver continues to underperform gold in a continually increasing gold/silver ratio, but could in fact be responding up from a triple bottom.

Gold : Silver Ratio

The strong gold / silver ratio breakout continues to hold for now, indicating still lower metal prices ahead.

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Market Analysis 12 Aug 2021

Aug 13th, 2021 No comments

Executive summary

The Dow Jones breaks up through the double top at a key break level which indicates yet higher new highs in the short term, and perhaps even medium term. Despite breaching this strong trigger point the bearish patterns remain in place indicating a powerful decline phase to follow once the pattern breaks and finally tops out. Much depends on whether the bearish patterns are maintained or invalidated, because at the moment we remain at the forefront of a long-term decline as the effect of numerous impacts continue to bore in and eventually collapse the structure.

US Treasury 10 year yield starts to strengthen as US equities hold at elevated levels. This now means the acid test fails because bonds and equities are moving in the same direction. This also means that if US equities advance further Treasuries could also advance and therefore yield will weaken. This seems to be a period of acid test failure during equity strength and acid test success during equity weakness.

The US$ rallies back into indecision, whilst the earlier bearish signals continue to threaten. The earlier breakdown is invalidating, and future dollar movement depends largely on what US Treasury yield does. Gold responds to recent Treasury strength with severe breakdowns invalidating earlier bullish signals, although now enjoying a relief rally. But the situation is set for further gold weakness once all relief rally activity exhausts, and US miners are bearish in sympathy.

Dow

The Dow Jones breaks up through the double top at a key break level which indicates yet higher new highs in the short term. Despite breaching this strong trigger point the bearish patterns remain in place with the compound sell divergence and rising wedges which threaten severe declines once the bullish pattern plays out.

The Dow short term 3 months chart indicates the breakout of through the key break level to a new high. This is likely to propel the index to yet new all-time highs.

US Dollar

The US$ index rallies back into indecision, whilst the earlier sell divergence holds and continues to threaten. The earlier bear flag breakdown is invalidating, and future dollar movement depends largely on what US Treasury yield does.

EuroDollar

The EuroDollar declines back into indecision with the earlier bull flag breakout invalidating. The earlier buy divergence has extended and looks set to advance Euro value but the MACD buy signal has invalidated and consequently Euro value suffers indecision, similar to the dollar.

South African Rand

The Rand also declines back into indecision, reflecting the dollar rally back into indecision with the wedge and flag breakdowns invalidating. The reducing channel breakout is still active, after a brief invalidation, and this promises dollar strength and Rand weakness.

US Treasuries

US Treasury 10 year yield starts to strengthen in the wake of buy divergence, but also as US equities hold at elevated levels. This means the acid test fails because bonds and equities are moving in the same direction. This also means that if US equities advance further Treasuries could also advance and therefore yield will weaken. This seems to be a period of acid test failure during equity strength and acid test success during equity weakness.

Treasury yield strengthens slightly and gold declines quite markedly, restoring the historic correlation between these two elements. Much depends on how Treasury yield responds in the next period, because this is the main driver of investment decisions.

Gold

Gold responds with two severe breakdowns to recent Treasury strength. This invalidates the earlier bull flag breakout, although gold is enjoying a relief rally. But the situation is now set for further gold weakness once all the relief rallying activity exhausts. The MACD buy signal has invalidated and US miners are bearish in sympathy with gold.

Hui : Gold Ratio

The HUI / Gold ratio breakout is invalidating as US miners decline in sympathy with gold. This process has also developed sell divergence which should prompt further declines.

GDX US Gold ETF

The same can be said of GDX with identical criteria of the bull flag invalidating and development of sell divergence which should prompt further declines.

GDX Junior : GDX Ratio

The GDXJ:GDX ratio indicates Juniors leading Majors down the reducing channel which indicates more miner weakness ahead.

Silver

Silver’s earlier picture of zig-zag indecision has resolved into multiple breakdowns in sympathy with gold and Treasury yield strength. This too will enjoy some level of relief rallies, as with gold, but is now set for further silver weakness once all the relief rallying activity exhausts.

Gold : Silver Ratio

The strong gold / silver ratio breakout indicates lower metal prices ahead.

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Market Analysis 5 Aug 2021

Aug 5th, 2021 No comments

Executive summary

The Dow Jones continues in a topping pattern with a double top at a key break level which continues to hold. This now creates a strong trigger point which all indicates a powerful decline phase is about to start once the pattern breaks to release powerful pent-up negative energy which will cause havoc once the US market finally tops out, because we remain at the forefront of a long-term decline as the effect of numerous impacts continue to bore in and eventually collapse the structure.

US Treasury 10 year yield continues to remain weak as US equities continue to hold at elevated levels, which indicates the ‘acid test’ is holding with both US equities and Treasuries moving in the same upward direction. But this is not likely to persist much longer which also means added support to the gold market may very soon be at an end.

The US$ is still in decline which is likely to last a while longer, with support from the Euro in opposite mode. Gold has a positive bias at the start of a rally with some support from US miners, both of which may be short-lived because US Treasury yields may start to strengthen soon.

Dow

The Dow Jones continues in a topping pattern with a double top at a key break level which continues to hold. This now creates a strong trigger point at the head of a compound sell divergence which extends back 11 months which all indicates a powerful decline phase is about to start once the pattern breaks. Added impetus will be provided once the bearish rising wedge is breached decisively to release powerful pent-up negative energy which will cause havoc once the US market finally tops out.

The Dow short term 3 months chart indicates the approach to the key break level which will either propel the index to yet new all-time highs but a breakdown beckons which will test support levels. The latter is becoming the more likely as lagging upward momentum develops (not shown).

US Dollar

The US$ index is still in decline in the wake of the sell divergence, after the bear flag triggered. The MACD sell signal also remains active and this declining dollar mode is likely to last a while longer, with support from the Euro in opposite mode.

EuroDollar

The EuroDollar is still advancing in the wake of the buy divergence, after the bull flag triggered. The MACD buy signal also remains active and this advancing Euro mode is likely to last a while longer.

South African Rand

Rand bias has changed to strength as the dollar weakens. There are now dollar breakdowns of both the rising wedge and the bear flag which is likely to strengthen the Rand as well as weaken the dollar further. The reducing channel breakout has not quite invalidated but this now seems likely to occur.

US Treasuries

US Treasury 10 year yield continues to remain weak as US equities continue to hold at elevated levels, which indicates the ‘acid test’ is holding with both US equities and Treasuries moving in the same upward direction. But this is not likely to persist much longer with signs of buy divergences beginning to develop in Treasury yields. This also means added support to the gold market may very soon be at an end.

Whilst continued weak Treasury yields have been supporting gold, this is likely to be close to a turning point. Once yield starts to strengthen gold will start to weaken, but there is a distortion in the above combination chart which displays positive correlation for the last 3 months which is historically incorrect. This may now correct with disproportionate gold strength.

Gold

The Gold breakout from the bull flag is holding in the wake of buy divergence and continued reluctance of US Treasury yield strength. This suggests more gold strength to come, with the MACD buy signal also holding, just. Perhaps more impetus is required from US miners which thus far have been only partial.

Hui : Gold Ratio

The HUI / Gold ratio breakout is holding in the wake of the buy divergence in a chart that seems to hold more upside. But the balance of probabilities seems to indicate the rally may be terminating, despite the MACD buy signal.

GDX US Gold ETF

The same can be said of GDX with identical criteria. Maybe the miner rally remains short and sweet.

Dust US miners bear index

The Dust chart reflects a geared inverse situation of that of US miners, nearly exactly. This supports higher US miners and gold, with the breakdown very nearly starting to close the gap (green).The MACD sell signal has clarified somewhat in support of more downside, supporting higher miners.

Silver

Silver exhibits a continued mixed picture with a zig-zag chart reflecting procrastination. This is less bullish than gold which indicates a less positive picture. Will the minor break from the bull flag activate or will Treasury yield support remain dubious? The latter seems more likely, as the MACD buy signal continues to procrastinate.

Gold : Silver Ratio

The gold / silver ratio breakout has become static with even a lower close this week. But the trend is up indicating lower metal prices to come.

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