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Now that the US stock market has gotten in sync with the rest of the world in its ups and downs, it also joins the rest of the world in generally (and loosely; it’s not a minute-by-minute relationship) being inverse to the Gold-Silver ratio (GSR, AKA the “metallic credit spread” –Hoye).
Here is the daily view of the GSR, showing a gap up and spike that came with the stock market’s big disturbance and a consolidation down that has come with its relief bounce. This is a bullish chart and so, it is a short-term bearish chart for US and global stocks. GSR broke out and is bullish while above the MA 50’s, MACD and RSI are positive and AROON is trend up.
Today’s post is late and brief as I’ve been out most of the day so far. A one day thing.
Yesterday’s tape was a mess. A bullish breakout that failed, then a bearish breakout that failed, leaving a brutal bull trap at the close in the form of a 70% bullish falling wedge, a possible double bottom setup and a supportive 5min buy signal.
Sometimes these are topping patterns though and that was the case here. The wedge has broken down with a target in the 1908 area, and I’m expecting to see a 1903 retest today unless ……. this is a triangle, in which case I’d be looking for support in the 1916 area, not quite hit at the current low today. SPX 5min chart:
We should see a retest of the 1903 low today and really we should see a trend down day today, though there’s little sign of that so far. The upside marker for resistance that should not be broken today is 1940-2, and if that’s broken then we may be seeing a continuation of yesterday’s crazy tape. As long as that holds I’m leaning short here into a 1903 retest with possible (but unlikely IMO) triangle support in the 1916 area. Stan’s update this morning is here.