Cyclical indicator PALL/Gold has bounced to and at least temporarily halted at the SMA 50.
However, the weekly chart reviewed previously has recovered the EMA 20. If this indicator resumes upward it would be a positive macro market and economic signal. We noted during the correction that it had taken a hard hit but was not broken.
Risk ‘on’ indicator HYG has bounced to the SMA 50 and is pulling back to the up sloped SMA 200. A key juncture here.
Even as junk is near new highs vs. T bonds, which are getting a yield spike again today.
Gold/Silver ratio (GSR) is indicating pressure on precious metals of course, but also commodities and anti-USD global markets (like EM), i.e. the ‘inflation trade’.
Uncle Buck himself is bouncing in a well formed ‘W’ pattern. Resistance is right here at the middle of the ‘W’. Next resistance, using UUP as a reference, is at around 24.10 and the declining SMA 200. Both GSR and USD would likely pressure the stock market if they continue rising.
LRCX continues to underwhelm vs. SMH and so I continue to hold this thus far frustrating short position. More important than my trading exploits, it continues to indicate a negative divergence within the Semi sector if we can use LRCX as a proxy for Semi Equipment.
It’s the same for LRCX vs. broad Tech.
AMAT on the other hand looks better but has not made a higher high vs. SMH (or QQQ).
Let’s finish with a look at the ultimate risk ‘on’ indicator, SPX vs. Gold (SPY/GLD). The ratio got hammered in February and has had an ‘outside’ month, meaning there was a lot of volatility and indecision with respect to the macro this month (says Captain Obvious).
It appears it may close in a bullish position and this indicator (Amigo #1) has higher to go by our long-term target. Regardless of the target, as of today risk is still on.
I will try to periodically update macro signals and I thought today was a good opportunity to do so since the market has been bouncing but some of the indicators above have come to decision points. Risk is still ‘on’ and the cyclical stuff is still in play. But we can watch for confirmations, divergences and/or changes going forward.
You may have noticed by the Trade Log that I did some profit taking today. Cash was bumped up and I want to see how the market does at this potential ripple area and decision point.