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This is about GLD, not necessary the precious metal gold. We're up against some pretty impressive resistance. I am short with a tight stop. I came into the morning long GLD (my 2nd biggest position); I sold the long when GLD was up 18 cents. I shorted GLD subsequent to that, with an average price of 120.55, and it is now by far my biggest position.
Tim: Knock knock!
You: Who's there?
Tim: Dwayne!
You: Dwayne Who?
Tim: Dwayne the bathtub! I'm Dwowning!
Even though I've been mixed up with computers since 1980, I sometimes much prefer just having a few charts printed out that I can mark up with a pen and – – if I'm feeling especially daring – – hold a pair of charts up against the sunlight to see how they compare.
Yesterday, prior to going to my umpteenth children's birthday party, I grabbed The Big Short (which I finished last night) and a trio of charts that I wanted to look at. The first was something I printed out of curiosity - the S&P 500 divided by the price of GLD. This chart is beneath, and what I think I found was pretty interesting.
I was curious to see what range existed between areas of resistance and areas of support which were successfully broken. Keep in mind I didn't even have a ruler with me – – just a couple of sheets of paper – – so even drawing straight lines was a bit of a challenge. In any case, after a couple of errors, I got my lines drawn, and I measured them. To my surprise, they were all identically spaced.
What this allowed me to venture was that I could actually establish a reasonable target price for this ratio. The answer I reached was 6.75, which is about 28% lower than the current level. I found this terribly interesting, because my conjecture (which is a little outlandish, so even I'm not that comfortable with it) is that our intermediate-term bottom on the S&P will be around 925, and GLD will be higher. If those are both realized, then a 28% drop in this ratio would be nailed. (Of course, GLD could simply be even higher and the S&P not quite so low; the point is that the ratio calls for a 28% drop).
On the other pair of charts, I took a fresh look at my 1937-1942 analog, which I've been using since October 2008 and is detailed on my Big Picture page. I hand-labeled all the swings in the market during the key portion of this analog (which I've shown below), and I compared it to the current market (which I'm not showing here). The similarity was beyond breathtaking. According to my analog, we are precisely at point 17 right now.
What this would call for at this point would be a fall to not-quite-as-low-as-February lows (around 1070 or thereabouts), a meaty bounce, but not to new recovery highs, and then a more serious tumble to the mid-900s in the summer.
Last night, when the /ES was down 13 and gold was up by double digits, I was looking forward to seeing if today would kick off the 17-to-18 swoon in earnest. Now that the opening is approaching, GLD is down a little and the ES is flat, so maybe the day's fireworks have been snuffed out. In any event, these movements don't take place instantly, and they certainly don't take place according to our demands. But the perfection of the sequence so far is astonishing to me, and I intend to continue using this analog as my principal guide until such time as it may be invalidated.
The market had a bounce last week, with the DJUS Total Stock Market Index advancing 2.74%. There are 148 subsectors. You can easily see the top/bottom performers by going to the WSJ industry page.
Below is a 1 week performance view for the 10 best/worst performing subsectors (industries):
(data courtesy of WSJ).
You can find this information for a number of time periods, and it it updated daily. It's a great way to perform an end of the day review and wrap your head around the market action beneath the indices. I've created a full report of the 148 sectors sorted by weekly performance along with the weekly/daily charts of the 24 broad sectors here. You will need to rotate the chart pages counter clockwise for easy viewing.
My individual charts use a 13/34 period exponential moving average. I'm interested in the relationship of these two lines to each other (e.g. is the 13 moving toward or away from the 34?) and the relationship of price to these two lines. I included thumbnail sketches of all 24 sectors so that you can see all of them at a glance. Stockcharts uses a 20/50 moving average that is not editable in this thumbnail view. The same concept is at work though–short moving averages v. longer moving averages and the price relative to those. Currently all 24 sectors see price action below the 20 period and 8 of the 24 sectors have the 20 day below the 50 day.
