taod4

Request:

I would like a daily chart for the SP 500 divided by the price of gold over the last year. It would be nice to know when this is likely to break its downtrend and so it would be interesting to know the major (and minor) resistance levels that, if broken, indicate a trend change. Feel free to put down an opinion as to how far above the resistance levels the curve needs to go to be reasonably sure the trend has changed. Thanks.

Response:

Hi Douglas,

I have attached your requested daily SPX-Gold ratio chart.

Note that the momentum indicators had been indicating a reversal of trend (of some sort) for quite a while before the short term bottom finally came violently last week. The ratio impulsively launched right up into its first zone of resistance where the 50 day simple moving average resides along with a cluster of visual congestion. While the ratio has turned down from there it is by no means technically broken. In fact, it is actually now in a daily uptrend and may signal a rise to as high as the 50% retracement level and the visual resistance area around the 200 day SMA.

In short, the ratio (spx to gold) is still in a bullish posture, but there are caveats:

1) The weekly and monthly charts are still locked in severe downtrends and this implies that the current rebound, while it could end up being impressive, is of the COUNTER trend variety.

2) There is a warning flag on stocks beyond the short term due to an ascending triangle stance on the VIX which, if not negated, will prove very problematic for the markets. I have noted this on the website.

But generally, the way I am looking at this is that if the spx-gold ratio breaks up from the 50 day sma, it will threaten the 200. If it were to break that, we may begin to look for a major (longer term) trend change that would last beyond the next 1-3 months. But stocks are very far away from such an event with a lot of technical damage relative to gold that will not be easily repaired.

Thank you for using the TA onDemand service once again and good luck!

Gary Tanashian

http://www.biiwii.com

Request:

I would like your outlook on RIM.TO near term. Thanks :)

Response:

Hi Ryan,

Thank you for using our service. Your daily chart of RIM.to is attached.

The first thing I notice is that the stock has retreated to levels that would normally* be a buying opportunity. It is deeply over sold to some fib retracement levels, hitting the 200sma and has not yet broken the uptrend. Also, a few bullish divergences are creeping in on some indicators shown in the lower panels.

*The asterisk is because one might want to question whether what is happening now in the markets is 'normal'. You know what they say about over sold stocks in bear markets; they can get even more over sold. So it would be wise to factor this in to your decision making.

Regards and thank you again for using the TA onDemand Service!

Gary Tanashian

http://www.biiwii.com