NFTRH; In-Day Market Signals (Priority: High)

Industrial Metals and Palladium are dropping vs. gold today. What is interesting is not so much that they are dropping but that they are dropping in relation to gold, which is also getting hammered. This is not inflationary signaling and the declines in nominal GYX & PALL are not economically positive.

Consumer Discretionary is down vs. Consumer Staples but is still above the breakdown point per this weekly chart. A further drop from here would be bearish just as a continued drop in the indicators above would be bearish.

Junk/IG & Junk/Treasury are down but still somewhat on trend.

Also, nominal HYG is still completely intact and not showing risk ‘off’ behavior in the market.

RUT/SPX tried to lurch upward with its strong USD tailwind but has pulled back in-day, back below the trend line. It’s interesting, at least.

I don’t have a tool for checking the yield curve in-day, but as of yesterday it was well flattening and not adversarial to the risk ‘on’ macro while very adversarial to gold. Going out on the curve however, I am able to pull the 30yr-5yr yield spread. This paints a different picture as the 30-5 has been above the SMA 50 and the July highs for a few days now. It rose in February as the market took a mini crash. I just find it interesting.

3 Bedfellows that seem unified in a dis-inflationary theme at this time. GYX/Gold price is noted as of yesterday. The ratio is obviously more bearish today.

The big picture monthly view of SPX/Gold as of yesterday’s close.

Today the ratio is up again with the stock market down. Precious metals are being liquidated but if the stock market were to continue to weaken that would evolve into a buying opportunity for the gold sector. What is interesting is how overbought SPX/Gold is (not to mention at our target, which of course does not need to be a stop sign). Risk is at hand for stock bulls.

Finally, a turning macro would be pertinent to gold stocks and GDX is in its 2nd day of higher than average, but perhaps not final capitulation volume.

HUI is breaking through the first support area as reviewed in a recent update. If an epic crash is in process for this sector index the big time volume may come at 120. But a question is, just how many people have been bullish the gold sector relative to before the crash of 2008? Not many in my opinion, which opens the question of where on earth would the epic puke volume come from? Which begs another question (that I am asking myself)… how greedy do I want to be in buying? The reversal off of whatever bottom lay ahead is likely to be ferocious, after all.

But you know I am a stickler about the need for the US stock market to roll over. If some of the indicators reviewed above continue to roll over and SPX follows suit I will be prepared to add gold stock positions.

I am not always watching the market, so if something notable happens and there is not a peep from me, don’t assume it is because I would be doing nothing. That is why I am trying to frame the situation as it evolves so we’ll have continuing touch points on the proceedings in the event I am not available at a key moment. Fun stuff, eh?