Extreme Machines?

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It looks like the machines have been rolling from one speculation to another, long or short. Just this year alone, the Ag’s got pumped…

dba

Silver got humped…

silver

Gold vs. Silver got dumped…

gold.silver

Commodities have been wood shedded (and lost major support to boot)…

dbc

Silver got blown up (and more and more looks like it is headed for an important bottom, i.e. major capitulation, sooner rather than later)…

slv

Platinum got destroyed…

pplt

Canadian junk stocks of all kinds, destroyed…

cdnx

Yen vs. USD (FXY-UUP) destroyed, along with nominal Yen…

fxy.uup

And now we have good old Uncle Buck, the star asset player right now.

uup

Problem is, we have an indicator that is mimicking Uncle Buck; the Gold-Silver ratio…

gld.slv

Another problem is, today’s activity is breaking the GSR out above longer-term resistance. We have been monitoring an Ascending Triangle in NFTRH since last year.

gsr.weekly

If traditional indications hold true, this is very bearish. USD has finally gotten the robo bid from the machines, just like so many assets before it. Only this time, unsurprisingly it comes with some baggage.

Gold rising vs. silver indicates that liquidity is draining out of asset markets the world over. Cyclical commodities and emerging markets, counter cyclical gold… you name it.

US stocks would try to hold up against this with a 90’s style ‘strong dollar’ or ‘king dollar’ story. We’ll remain open minded to that story, but a traditionally bearish indicator is breaking out today. The question is when do we return to a traditional mode in the macro markets? How long can policy inputs keep nontraditional relationships in play?

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