Looking at the spread chart, I think the bias has clearly changed this year.
The multi year underperformance of Gold relative to SP500 is probably behind us. On a 2-3 year future horizont Gold will probably outperform stocks. Will it do in a big way, or just minor? Let the chart guide us!
The chart also tells us something important! Even if you think as a real long term strategist, a real trendfollower, timing does matter! My view is that we will have to use dips in this relative value chart to build this position. So should anyone follow, selling SP500 stock portfolio or the whole index will be subject to actual Gold price.
- Gold/SP500 ratio moved above Kumo in February 2016. It was not yet a valid bullish Kumo breakout for two textbook reasons: price could not break and stay above the previous decisive high, so above the red dotted horizontal line. And Chikou Span could not break above past Kumo either
- Now we have Chikou Span (lagging line = spot price projected 26 weeks back) above the past Kumo, but still it is not yet in open space.
- Price is above Kijun and Senkou B (52 weeks average), but Heikin-Ashi tells us be patient here! Last week we had an inside candle, haDelta/SMA3 turned lower. This week has just started but we have a small doji so far.
Not a surprise, if you follow Gold and SPX charts separately: Gold as I wrote this morning started consolidation/pull back, while SPX, well .... no more comment than it reached All Time High from the recent lows.
- EWO is green bullish
I really start to think this chart will be one of the best for next few years. For me no question, that until this spread stays above 0,55-0,60, the chart simply tells us one thing: Gold has better strategic upside than Stocks. Should we switch stocks to Gold immediately at current levels? Hmm, maybe some.
But maybe we'll see some more sideaway move here, and one more pull back to Kumo/Kijun supports where we can buy Gold cheaper relative to Stocks.
I will soon post a Gold/US 10y Treasury chart too.
The multi year underperformance of Gold relative to SP500 is probably behind us. On a 2-3 year future horizont Gold will probably outperform stocks. Will it do in a big way, or just minor? Let the chart guide us!
The chart also tells us something important! Even if you think as a real long term strategist, a real trendfollower, timing does matter! My view is that we will have to use dips in this relative value chart to build this position. So should anyone follow, selling SP500 stock portfolio or the whole index will be subject to actual Gold price.
- Gold/SP500 ratio moved above Kumo in February 2016. It was not yet a valid bullish Kumo breakout for two textbook reasons: price could not break and stay above the previous decisive high, so above the red dotted horizontal line. And Chikou Span could not break above past Kumo either
- Now we have Chikou Span (lagging line = spot price projected 26 weeks back) above the past Kumo, but still it is not yet in open space.
- Price is above Kijun and Senkou B (52 weeks average), but Heikin-Ashi tells us be patient here! Last week we had an inside candle, haDelta/SMA3 turned lower. This week has just started but we have a small doji so far.
Not a surprise, if you follow Gold and SPX charts separately: Gold as I wrote this morning started consolidation/pull back, while SPX, well .... no more comment than it reached All Time High from the recent lows.
- EWO is green bullish
I really start to think this chart will be one of the best for next few years. For me no question, that until this spread stays above 0,55-0,60, the chart simply tells us one thing: Gold has better strategic upside than Stocks. Should we switch stocks to Gold immediately at current levels? Hmm, maybe some.
But maybe we'll see some more sideaway move here, and one more pull back to Kumo/Kijun supports where we can buy Gold cheaper relative to Stocks.
I will soon post a Gold/US 10y Treasury chart too.
