DJI/Gold - (Continuation) SHORT; UpdateThis is just an update of the original SHORT. Nothing but continued SELLing this spread, here!! - Still quite a ways to go.
Dowgold
DJIA/Gold Ratio & 30-year Bonds/Russell2000 in Phase Transition!The Dow Jones (IA) / Gold Ratio and the U.S. 30-year Treasury Bonds / Russell2000 Index Ratio are coinciding at key levels. Both ratios are at historic turning points, foreshadowing their respective Phase Transitions! (and as such, indicating highly volatile, multi-standard deviation moves in the global equity indexes.) The title chart is an extended (120 years) view of the ongoing DJIA / Gold analysis, this time applying the same metric as used in the earlier US 30-year Treasuries / Russell2000 Ratio analysis;
... For easy comparisons.
U.S. Market Capitalization / U.S. GDP now having exceeded 2.75 while the Historic Norm (not the low) remains 0.78 - i.e. ~70% below current levels(!!) - , it is rather self-evident that these phase transitions are likely to result in major (equity) market declines, and on a global scale. U.S. Margin Debt / U.S. GDP has also surpassed all previous, historic records (by a very wide margin!), not only in nominal measures but also in relative terms! I.e. Once this trap door opens (forced liquidations??... The most likely, least resistance path, catalyst) an initial 20%-25% decline in the SP500 would be well within the minimum expected.
Timing the Bubble Burst Sequence (DJIA/Gold); Part II, UpdateThis is an Update of the original post ;
This is now at a 36 month Major Resistance! It is quite likely this will be the (very) long-term, final top.
DJIA / Gold Ratio - SHORT; SELL it "forever"!!Well, at least for a generation - or two.
The long term Dow Jones Industrial Average:
If one trade could net 100% profit - DIA/XAUWe love watching this chart because it is very accurate but does not trade alot. We are currently following this trade set up both in an account and on paper.
The Trade:
Oct 1 2018: Buy $10,000 worth of XAU or roughly 8.3 oz
March 25 2020: Sell those 8.3 oz (now worth $13,494) for DIA @ $214.x or 63.2 shares
Today March 10, 2021: Those 63.2 shares of DIA are worth $20,160 or right at 100% profit
There are not many trades in this of course right now we are running up to another buy gold sell the market phase but caught in between. The sell the market buy gold happens above 22 and the buy the market sell the gold happens anywhere below 13 comfortably.
Happy trading
DJIA/GOLD Ratio - SHORT; The Dow's developing cliff-diveSelf explanatory.
... thus, one may need to resort to this ...
... soon!
Corollary to the above (Safe Havens)
Although this is a FLAT (minor Long) here, for now. - But only briefly!
... and since this is telling you that Gold is to continue significantly lower from here ...;
... it stands the reason that the Dow is about to go for an outright dive! - As the main chart in this ppost would suggest.
DOW GOLD RATIO - Key BreakdownWe may have just seen a key breakdown in the Dow/ Gold Ratio.
This would signal that the period of sustained out performance of stocks over gold, and indeed precious metals as a whole may be nearing an end.
As you can see on the left hand chart, a monthly cross of the 10 and the 50 moving averages was a strong tell that the trend had reversed, interestingly, this cross occurred several years after the peak in stocks.
We may be about to witness a similar signal today, this is predicated on the cross taking place, of course.
in the more immediate future, i would hazard a guess that stocks will stage a strong short covering rally, before petering out, unless there is news related to either progress on containing the Coronavirus or on global CBs mounting an even more desperate attempt to prevent the deflation that is bound to stem from the virus' impact on global supply chains.
That being said, free money will not produce more goods or services, and will most likely signal higher than anticipated inflation in the future, particularly once the virus is contained, more than likely driving gold higher on more traditional inflation fears.
To the right we can see a weekly chart, highlighting the severe technical damage that has been done, with the ratio below the 200 weekly moving average.
All of this with a backdrop of the gold silver ratio hitting over 100 in the last day or two, makes for quite a bullish environment for precious metals and a rather bleak outlook for equities.
