I continue not to have much time to closely watch the markets, but I do have a few observations.
Yesterday I noticed the Gold/Copper ratio was firm and today it continued upward. This gave a level of caution about the markets. I considered dumping my copper stocks, but decided to hold on until unless they break down. I did, however, drop URNM because it is breaking down along with the Uranium sector. This was not noted in the trade log because it was a holding in the taxable account, which I will not over illustrate, as already noted. URNM gave me a moderate tax loss and I took it.
But yesterday’s signal in the Copper/Gold ratio…
…was a bit of a concern, and today’s continued firmness…
… along with a move in the Gold/Silver ratio raised the level of concern.
But there was also inflammatory political news baked into today’s overdue market negativity. That is actually the main reason I did not do any other selling. I don’t like selling news events, or buying them for that matter.
Curiously, the USD (DXY) was weak while the Gold/Silver ratio rammed upward. That is another reason I stayed moderated. If there is a liquidity issue brewing it has not yet been reflected in the US dollar.
Another interesting characteristic of the last few trading sessions has been the dumping of the sexy stars like Nvidia, Microsoft and the NDX in general while relative strength came to broader market measures. Small caps, Equal Weight SPX, Healthcare, Energy and others have spiked in relation to NDX and SPX. These are spikes within intact downtrends, but the situation needs to be watched.
Remember that improving market breadth is generally a good thing, but it is not the savior of the market when the headline stocks start to get sold down. The momo money is at least in the short-term coming out of the mega cap headliners while the broader stuff has been relatively weak for a long while. In other words, the big guys had further to fall. Hence, the short-term out-performance by the broader measures.
My plan is to see if today and any continued short-term negativity are just blips triggered by the media or the start of something worse. Tomorrow is another day with more signals. For now I’m sitting on my hands.
