Gold Sell, Bond Buy
Dow Jones Industrial Average 11,206
Value Line Arithmetic Index 2,025
30-Year Treasury Yield (TYX) 5.27%
20+ Year Treasury Bond Price (TLT) 83.08
Gold 1/10 Ounce (GLD) $68.15
The Big Picture for Stocks
The 4-year cycle calls for a bear market bottom in 2006.
Technical Trendicator (1-4 month trend):
Stock Prices Down
Bond Prices Up (See below)
Gold Price Down (See below)
Our model is giving us a buy signal for bonds and a sell signal for gold. Note the chart below on bonds. We are oversold and turning upward. This may just be a temporary contra-trend move in a bear market as people flee stocks for a safer haven. But bonds are oversold and trying to turn upward. If you turned the chart on bonds upside down, you have the chart on gold. Gold is overbought and turning lower.
That is the strategy. Now here are the tactics. Place a market buy on TLT and a sell-stop on GLD at 67.90. As executed, we will place stops to reverse the positions as follows: Sell-stop on TLT at 82.49 and a buy-stop on GLD at 71.18.