Blogs

TIME NOW TO BUY GOLD AND SELL THE DOW?

In my blog of February 23 I gave a short term buy signal for the Dow (it closed the previous day at 16621) and forecast that it could rise "until the last week of April. In the event the Dow peaked April 20th (see chart), a week early. In my blog of March 31st I looked at the Dow/gold ratio and forecast that it should keep rising "until April 15 at the very least"...the chart identifies where the ratio peaked one day later on Monday April 18. And now the Dow and the Dow/gold ratio have both given a sell signal.

DOW TO BEAT GOLD AT LEAST UNTIL MID APRIL

On February 23 I posted a blog entitled "Dow Triggers Short Term Buy Signal"...the index closed the day prior at 16621 and yesterday closed at 17717, a gain of 6.6 percent...the forecast was that the Dow could rise "until the last week of April." A look at the the daily chart of the Dow shows that it could encounter resistance around the 18000 level but there is as yet no signal to sell.

DOW TRIGGERS SHORT TERM BUY SIGNAL

There is a lot of bearish comment about the equity markets...many long term bulls have now moved to the bearish camp and see the current action as just a correction in a new bear market. However, InvesTRAC's short term system has triggered a buy signal with the forecast model showing that strength could be expected to continue into the last week of April.

TBONDS TO BEAT GOLD

Everyone expects US TBond yields to rise and bond prices to fall but the chart I'm showing you says that gold is going to behave even worse. Check out the chart below which shows the TBond/gold ratio plotted daily withits smoothed indexed rate of change. The indicator has turned up and by historic accounts this should open the way for the ratio to keep rising now that it is pushing up through its downtrend, This action suggests that one should buy TBonds and sell gold in equall values.

 

US DOLLAR INDEX TO WEAKEN

One of the ratios we have been watching is CRUDE/USDINDEX (see blog date September 3) which we advised was going to rise as crude rose and US dollar weakened. Well this ratio continues to give evidence that we should continue to see strong crude and weak USD. Crude is indeed moving up and it looks as if the USD Index could drop fairly sharply...InvesTRAC's short term model is showing a declining trend into the first week of November.

CRUDE/TBOND RATIO TO RISE

The market paricipants are said to be waiting for Janet Yellen to either keep rates where they are or raise them modestly. The market is telling us that rates are going up, hence the price of TBonds down. And with oil signalling it's going higher it would be good to look  at the Crude/Tbond (30 year) ratio which fell 67 percent from its September 2013 high to its low made on August 29...it has since reversed a sharp downtrend and is now consolidating the initial flurry and seems to have the potential to rise 41 percent to the previous high.

CRUDE/US DOLLAR INDEX RATIO: TELLING US CRUDE OIL TO RISE?

Historically the direction of the CRUDE/USDOLLAR INDEX RATIO confirms the direction of the oil price. Right now the short term InvesTRAC indicators are pointing up and the cycle model indicates strength into mid October. Have a look at the daily chart of the rratio below...notice how the ratio reversed its downtrend and ran up to encounter the ttandem moving average...it has backed away and now needs to push higher through 0.499 to open up the way for a test of the previous highs at 0.647.

CRUDE/US DOLLAR INDEX RATIO: TELLING US CRUDE OIL TO RISE?

Historically the direction of the CRUDE/USDOLLAR INDEX RATIO confirms the direction of the oil price. Right now the short term InvesTRAC indicators are pointing up and the cycle model indicates strength into mid October. Have a look at the daily chart of the rratio below...notice how the ratio reversed its downtrend and ran up to encounter the ttandem moving average...it has backed away and now needs to push higher through 0.499 to open up the way for a test of the previous highs at 0.647.

CHINESE STOCKS TO FALL FURTHER

What faith do you have in the Chinese authorities managing to contain weakness in stocks listed on the Shanghai Stock Exchange? If you believe that they can succeed you perhaps should think again. Have a look at the daily chart below of the SSE index...I am not an Elliott Wave expert but to me there is a clear nine wave decline, labelled (A), followed by a a flat correction labelled (B) and now wave (C) is in progress. If you are thinking of buying you should wait. 

RATIO TBOND TO USD INDEX: IS IT SIGNALLING THAT DOLLAR TO WEAKEN?

We are told that rising interest rates will boost the value of the USD against other currencies. And this has been the case since August last year as the TBond/USDX ratio has fallen 20 percent....falling bond price (rising interest rates) helped the dollar to rise....this action you can see in the accompanying chart. You can see that the ratio has fallen in a five wave move and that a close above 1.599 would reverse the downtrend and take out the previous high. Watch to see if this level gets taken out as it would signal that interest rates could fall bringing the dollar down with it.