Owners of Gold and T-Bonds have done well of late, reflected by the sharp rally in gold and a decline in yields below. On a short-term basis, could extremes be at hand?
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I am putting together this post pre-market, so the day is young for sure. At this time Gold is up and was very near the key $1,900 channel/Fibonacci resistance level earlier this morning (see key resistance level) Gold is up around $20 per ounce at the time of the post, yet it is $25 off its highs hit in the overnight market highs, as Gold reached $1,896. Gold created a bearish upside wick on Friday, keep an eye out to see if it makes more of them up here at key levels.
Over the weekend I came across bond sentiment numbers, reflecting 98% bullish bond sentiment, very similar to readings hit one year ago this week (see bond peak elevation).
Is 98% bond bulls an extreme? I will let you be a judge of that! Per the “Power of the Pattern“ key support and resistance are in play in these two safe haven assets and if you have gains in the assets, it might be a rather good idea to protect them, at these short-term extremes.
If these channel extremes don’t contain Gold and Yields, stocks are in huge trouble!
Masti….Thanks for the comment and great question. You shared that if Gold declines, shouldn’t stocks rally?
Yesterday I shared that with the VIX at 50 and the S&P 500 is at the 50% retracement, odds favored a stock market rally….see 50/50 post in the link below
https://www.kimblechartingsolutions.com/2011/08/5050-challenge-is-at-hand/
Yes I did share that only 6 times in the past 20 years, the VIX has hit the 50 level and so far, when the VIX did hit those levels, good sized rallies in the 500 index did take place.
https://www.kimblechartingsolutions.com/2011/08/this-condition-led-to-a-20-rally-in-the-500-index-5-times-in-the-past-10-years-different-this-time-around/
Some of these rallies happened the beginning of long-term moves and some where countertrend….Will see if it happens at all this time around.
Thanks again,
Chris
Hello from Australia, love the site. Is it possible the gold trend line caps it but yields collapse under the trend line as they did in 2008, which as you state is when gold last had it’s big correction?
What i am reading in your statement is that gold is ripe for a short term drop – but if this is the case why would stocks not rally – was it not what you said a week ago (up to 20%) – unless i am totally not understanding the charts !
Doug…..I like to call it “Bi-Flation” (taken from Bi-Polar) Some things up and some down! This is why I like the “Power of the Pattern” per following the patterns of each assets, versus attempting to map a puzzle per a certain outcome that has to look a certain way….inflation or deflation and making choices based upon the puzzle. We often live in unique times and I believe now isn’t any different.
Schizophrenic charts – Is it hyperinflation or hyperdeflation? Strange times.