Stocks and precious metals up
I’ve been mentioning
frequently the BLV (long-term bond term bond) / GLD (gold) ratio of late (red
line on the chart). I am doing this because I feel this is the chart to see, and that we are seeing an epic battle in front of
our eyes. Here you have an updated chart. As you can see the ratio continues to
decline after breaking the green horizontal line (the last secondary reaction
lows of the ratio). This is especially worrisome for bondholders, as the ratio
declines with gold under the spell of a primary bear market. How would the
ratio look like if gold was moderately strong? As I have written before, a
declining ratio (stronger gold) plus the violation of an important trend line
(purple ascending line) is not a good omen for bonds.
 |
| Bonds: A bearish chart a bearish ratio |
The straw
that will break the camel’s back is likely to be a violation of the horizontal
pink line (the major secondary reaction lows). If such level is violated
something nasty may happen to bonds. You can find more information as to the
importance of this ratio here and here.
Well, let’s
turn our eyes to stocks.
The SPY,
Industrials and Transports closed up. The Industrials and the SPY made higher
highs. The primary and secondary trend remains bullish.
Today’s
volume was lower than yesterday’s, which makes it a bearish volume day.
Gold and
silver (GLD and SLV) closed up. The primary and secondary trend remains
bearish.
SIL and GDX
closed up. The primary and secondary trend remains bearish.
Have a nice
weekend.
Sincerely,
The Dow
Theorist
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