I like to use this chart when I want to know how the HUI is doing compared
the the stock markets. It clearly shows that sometimes the HUI is outperforming
the SPX in a big way and sometimes the SPX is outperforming the HUI, yellow
shaded areas, and sometimes they move together. I would like to focus your
attention to the right side of the chart that shows the blue shaded area. The
blue shaded area shows how the HUI and the SPX has decoupled starting in November
of 2012. How long this divergence goes on is anybodies guess. But it is what
it is until it changes.
Lets look at a couple of ratio chart that shows something may be brewing when
we compare gold to the COMPQ or the SPX. First lets look at the Gold to COMPQ
ratio that is showing that the COMPQ has been outperforming gold for over a
year now. There is a potential unbalanced double top in place where the double
top trendline is being tested right here and now. You can see gold strongly
outperformed the COMPQ during the first 9 years or so before the ratio put
in it's first peak in 2009. It formed a second peak that was slightly higher
than the first peak but there was a very large negative divergence on the RSI
and MACD indicators. Is this chart now suggesting that it might be time for
the stock markets to start outperforming gold in a big way if the double top
comes to fruition?
Lets look at the gold to SPX ratio chart that is showing a very similar pattern
to the ratio chart above. Here I'm using a line chart that shows the ratio
is breaking down from the unbalanced double top. You can see the beautiful
inverse H&S bottom that was made back in late 1990s and early 2000s that
launched the outperformance of gold to the stock markets. Keep in mind a big
base leads to a big bull market and a big top leads to a big bear market which
this ratio chart clearly shows. Also note the big negative divergences on the
RSI and the MACD indicators. The question that has to be asked is the bull
market that gold has enjoyed since 2000 compared to the stock markets coming
to an end? Stay tuned as things are starting to get interesting.
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