Sure, the bounce in bonds is a negative divergence to the reflationary/inflationary ‘Trump Trade’. Sure, the post-January rise in Healthcare vs. the S&P 500 is a negative divergence. Same goes for the decline in commodities and the under performance by Materials (wall-building or otherwise). But on a more macro level, this chart is the biggest divergence of all over the last 2.5 months.
When gold declines or flat lines vs. commodities we are on anything from a Goldilocks environment to full ‘Inflation trade’, the latter of which the ‘Trump Trade’ is shooting for (a weakening of the US dollar is part of this macro parlor trick, in service to inflationary growth). When gold rises vs. Commodities we are talking disinflation, i.e. the opposite of what the would-be fiscal stimulators would want. We’ve been noting the clear support level on this chart since December.
I have noticed a new breed of analyst out there. Or maybe he’s just the same old breed with a new pitch. Under Obama he was anti-everything and he wanted you to be anti-everything as well in your market positioning. But now he’s bullish because his political views have been affirmed by the electorate. Instead of just coldly using charts, data and history these fools are using their biased intellect. That is not going to work out well for them. It’s more important than ever to make sure your dogma is on a leash.*
* Paraphrased from the long-ago Boston band, the Volcano Suns.
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