May 16, 2019
By Mish Schneider
Tonight, I depart from the Economic Modern Family.
However, do not forget that they are very mixed and in extreme disharmony.
So much so, Biotech IBB is ready to write them all a script for Lexapro.
While the Family tries to sort it out, let’s look at a different family struggle.
The gold to silver ratio.
The top chart is silver.
The bottom chart is the ratio.
On the ratio chart, the blue line is the actual ratio.
The red line is the 20-DMA of the ratio. The black is 125 days or the 125-DMA.
The dotted lines are Bollinger Bands.
What does this look like to you?
If you are thinking that any bullish talk about the metals is premature and inaccurate, give yourself a gold star!
Today, the blue line (ratio) turned down and moved further away from the moving averages.
If we look at this ratio as a signal for inflationary pressures or as a hedge against any impending crises, then surely both metals are heavily sedated.
The Bollinger Bands indicate that the ratio could be getting oversold.
Yet, until that ratio flips and the blue line crosses the BB and then the red or 20-DMA, a starter position long is appropriate.
Should the ratio clear the black line, most likely it will accompany some watershed event-war, fear of inflation, a Fed rate cut, etc.
With the equity market in disarray and the metals weak, finding pockets of strength that are more than one-day wonders, is not so easy right now.
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S&P 500 (SPY) Back to an unconfirmed bullish phase. 286.13 is the 50-DMA to hold or not
Russell 2000 (IWM) 154.50 and below is not a good sign. Granddad is tired
Dow (DIA) Could not clear the 50-DMA even with the Boeing rally.
Nasdaq (QQQ) The 50-DMA is at 183.26 now pivotal.
KRE (Regional Banks) 54.20 resistance with this in a confirmed bearish phase. 51.31 the 200-WMA
SMH (Semiconductors) Confirmed caution phase. Inside day too-so under 106.66 trouble
IYT (Transportation) Unconfirmed Bullish with 189.37 the support this must hold
IBB (Biotechnology) 105 resistance, 103.36 the 200 WMA that must hold
XRT (Retail) Under 42.12 expect more weakness.
Every day you'll be prepared to trade with: