In 2013 we cross-referenced the Palladium/Gold ratio with the positive Semi Equipment signals to firm the bullish economic thesis. So why not do so again in 2018? If it worked then, it could give a leg up for us now.
Nominal PALL is dropping hard but only testing the SMA 50.
But the PALL/GLD ratio is threatening a trend line after dropping through the SMA 50.
But before we get too excited (or concerned, depending on your outlook) let’s note the weekly chart of Palladium/Gold that we used back in 2013 to cross reference w/ the Semi signal and again in 2016 to confirm the new economic up signal after the 2015-2016 disturbance. There is no hint of a negative signal.
But the chart above does not account for today’s activity, so let’s use the ETFs again to see how it looks. Okay, it is doing the 1st thing it needs to do before going negative and that is to test the 1st moving average. It will take a while to get a signal here if one is coming (the most important signal is a cross down of the moving averages), but that is the point of a solid confirmation; it does not just happen along in a day or a week. There could be much grinding ahead (ref. 2014 into 2015).
I just wanted to get us a perspective view as we chart the Semi Equipment ratios, which are looking bad, with Pall/Gold still intact. If this goes bad too we are likely going to have a negative economic cycle. This picture argues for a balanced stance. There is no major negative economic signal in play yet. But the Semi Equip vs. SMH & QQQ sure are interesting.