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Part II - Connecting the Dots

By: Erik Swarts | Sunday, January 13, 2013

The long and short of things - the US dollar holds the trump card going forward:


As presented in the silver:gold and SPX performance series below, since the secular equity market high in 2000, the performance of the silver:gold ratio has closely followed the performance trend of the equity markets. It is also very interesting to note that this specific series to date has given excellent sell signals on the equity markets in various timeframes - when the performance of the SPX has exceeded the performance of the silver:gold ratio.

Each series begins from the respective timeframe's secular equity market (SPX) high in 2000.

Silver:Gold/SPX Performance Spread Monthly Chart

The (weekly) timeframe has provided the most prescient sell signals since the weekly secular market high in March 2000. The SPX marginally exceeded the ratio at the end of August 2000, twice in October 2007 and directly before the equity market crash in September 2008.

Silver:Gold/SPX Performance Spread Weekly Chart

Silver:Gold/SPX Performance Spread Daily Chart

The Australian dollar itself - and not the currency ETF (FXA) - was used to delineate long-term resistance.

Australian Dollar Weekly Chart

Australian Dollar Weekly Chart versus Silver:Gold Ratio

US Dollar Index 2000-2003 verus Australian Dollar Weekly

RUT versus RUT:SPX

SPX versus GSPBK Weekly

Part I - Connecting the Dots - 1/12/2013

 

Author: Erik Swarts

Erik Swarts
Market Anthropology

Although I am an active trader, I have always taken a broad perspective when approaching the markets. I respect the Big Picture and attempt to place each piece of information within its appropriate context and timeframe. I have found that without this approach, there is very little understanding of ones expectations in the market and an endless potential for risk.

I am not a stock picker - but trade the broader market itself in varying timeframes. I want to know which way the prevailing wind is blowing, where the doldrums can be expected and where the shoals will likely rise. I will not claim to know which vessel is the fastest or most comfortable for passage - but I can read the charts and know the risks.

I am not a salesperson for the market and its many wares. I observe it, contextualize its moving parts - both visible and discrete - and interpret.

I practice Market Anthropology - Welcome to my notes.

Erik Swarts is not a registered investment advisor. Under no circumstances should any content be used or interpreted as a recommendation for any investment, trade or approach to the markets. Trading and investing can be hazardous to your wealth. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This is strictly for educational and informational purposes only. All opinions expressed by Mr. Swarts are subject to change without notice, and the reader should always obtain current information and perform their own due diligence before making any investment or trading decision.

Copyright © 2011-2014 Erik Swarts