Wednesday, June 1, 2011

1 June 2011 (Gold Vs Nasdaq Vs Silver Vs USAGX Update)

 In case you were wondering how you got caught off-guard by the market's rally last week and into this week, you'll see the second derivative of the McClellan Summation Index (dotted green) reached outside of its 2nd standard deviation line as it reversed and rapidly climbed.  As you can see, today slowed the 2nd and 1st derivative.
 Short-term out of overbought.  Could reach all the way back to hold short at 60%.
 This looks like it could bounce a bit more.
The VIX Bollinger bands and the downward descending trendline don't give the VIX much room to rally from here.  However, there is enough room for some more panic - something this decline generally lacked until today.

Looking at individual stocks, it seems that a lot of stuff has been getting sold down quite hard for a while and that the trendlines were so steep that this past week and a half rally has broken many trendlines.  We will have to evaluate if those individual stocks can find support at their recent lows and form a "W" pattern or if they will break through lows and decline for a bit longer. 

I have been treading water with my convictions for sometime for a few reasons.  QEII is still continuing.  My VIX trendline is still intact.  Yield curve hasn't inverted.  However, all those things said, there is certainly plenty of weakness to go around when compared with the past two years.

As promised, here is the updated gold versus silver versus Nasdaq versus USAGX chart.  Unfortunately, the silver data is annual data so we miss out on a lot of the small movements from the 70s.  And, you are reading it correctly, the silver bull market started after gold, and gold started after USAGX.

I will also post all homemade charts in my "charts" page.

"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back... soon or late, it is ideas, not vested interests, which are dangerous for good or evil."
John Maynard Keynes

You might notice I have plenty of quotes from Keynes; this may seem odd for someone who is generally a libertarian free-market advocate.  However, I happen to agree with a lot of his ideas and quotes, but like anything, modern economists have twisted what he said to suit their own manipulative worlds. 

"The truth knocks on the door and you say, 'go away, I'm looking for the truth,' and it goes away. Puzzling."

Robert Pirsig

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