SPX Outperforming Gold & Oil

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Further to my post of January 5, the following provides an update on price action as of today’s (Thursday’s) close.

The following monthly chart shows the SPXGOLD and OIL in comparison format, as well as their respective high, low and today’s closing price for January, so far.

The instrument currently facing the “path of least resistance” is the SPX. It shot through prior near-term resistance (now support) of 3233 and continues to rally.

While GOLD and OIL tested (and briefly overshot) their near-term resistance levels of 1600 and 65.00, respectively, they’ve retreated substantially. Not only do these remain near-term resistance levels, there is considerable overhead supply above those levels, presenting the “path of greatest resistance.

The following SPX:VIX daily ratio chart shows price nearing its prior historical highs around 280 or just above.

To confirm an SPX continued rally, watch for:

  • the RSI to break and hold above its downtrend formation and hold above 50.00
  • the recent bullish MACD crossover to hold
  • the PMO to form a bullish crossover and hold
  • as I mentioned in my above-referenced post, the next major resistance level (target) for the SPX is 3350

The following GOLD:GVZ daily ratio chart shows that price is caught between its 50 and 200 moving averages.

To confirm whether the recent GOLD pullback reverses and retests 1600, or higher, watch for:

  • the RSI to break and hold above 50.00
  • the MACD to form a bullish crossover and hold
  • the PMO to form a bullish crossover and hold
  • price to blow through and hold above the 50 MA at 127.67

Otherwise, watch for GOLD weakness to continue, especially if the ratio price breaks and holds below its 200 MA at 114.27.

The following WTIC:OVX daily ratio chart shows that price is caught between its 50 and 200 moving averages.

To confirm whether the recent OIL pullback reverses and retests 65.00, or higher, watch for:

  • the RSI to reverse, break and hold above 50.00
  • the MACD to form a bullish crossover and hold
  • the PMO to form a bullish crossover and hold
  • price to blow through and hold above the 50 MA at 1.93

Otherwise, watch for OIL weakness to continue, especially if the ratio price breaks and holds below its 200 MA at 1.78.

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