In NFTRH 636’s Opening Notes we used the SPX portion of this chart to note…
Then for good measure a flagging stock market wondrously rallied basically on the vapors of 2020 literally in the final 100 minutes of the year. Most people were wearing their virtual party hats so I assume the machines simply did as programmed; and the program was bullish, as per so much of 2020.
Of course gold stocks, remote tools/cloud/SaaS and other stocks that gained bids during the scarier times in 2020 did not participate. The machines were set on inflationary ‘reflation’ and good cheer because if the country (and world) itself is not so overjoyed, why not find the cheer where you can? I am being both sarcastic and realistic.
Adding in HUI this morning we see that those vapors were a bull trap to anyone who took that bait and while I felt a tinge of discomfort about gold stocks on the 2020 close I kept in mind that it was all fun, games and algos. The real stuff would be presented as we open and proceed into 2021 and exit the Santa seasonal.
It’s not necessarily bearish for stocks, but the gold sector has done nearly a half a year of good corrective work and so, this is meaningful for the miners. Also important for the miners, the Gold/SPX ratio is making a move today. It has not broken the correction yet technically, but it did fill the February fear gap, hold support and RSI is on message. It could be the start of the end of the ignominy for the precious metals relative to broad stocks (Captain Obvious?).
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