Friday , 19 July 2024

Watch These 12 Data Points For Future Direction of Gold & Stocks (+2K Views)

A big short term move in both stocks and gold is probably fairly imminent as periods of extremely low volatility like weinvesting-hold-buy-sell are currently experiencing are invariably followed by periods of very high volatility that are brought about by a trigger event of some sort. There will probably be an advance warning somewhere, in a corner of the markets that perhaps isn’t widely watched so keep a close eye on these 12 inter-market signals.

The above are edited excerpts from an article* by Pater Tenebrarum ( entitled ‘Dull Markets’- Brace for a Major Move.

The following article is presented by Lorimer Wilson, editor of (Your Key to Making Money!), and the FREE Market Intelligence Report newsletter (sample here) and has been edited, abridged and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.

Tenebrarum goes on to say in further edited excerpts:

12 Inter and Intra-Market Data Relevant to Stocks and Gold

We have picked a series of charts below that are important for both stocks and gold…While we obviously don’t know for certain which direction the markets will ultimately take, there are a few warning signs in evidence for ‘risk’ assets while sentiment on gold and gold-related assets remains in the gutter. This does not necessarily mean that stocks will fall and gold will rise. It only tells us something about probabilities.

Money supply growth remains brisk enough to support risk assets, but we also don’t know for certain where the ‘critical threshold’ for money supply growth nowadays is. One frequent threshold was the 5% level in terms of annualized growth of money TMS-2 (current growth rate: approx. 8.25%), but both higher and lower threshold levels have been observed in the past. All we know for certain is that the medium term trend of money supply growth has turned down.

1. The RUT-SPX ratio continues to lag – click to enlarge.


 2. The NDX-SPX ratio has recovered lately– click to enlarge.


3. VIX and SPX: With the VIX below 12, the premium embedded in near term SPX options is about as low as it gets – click to enlarge.

Margin Debt

4. Search for Yield: With margin debt dipping after a large and almost uninterrupted advance, an initial warning signal has been given – click to enlarge.

high yieldA recent summary of high yield spreads from the WSJ.

 5. The JNK-TLT ratio: The support level indicated by the blue dotted lines needs to be watched. It would be bearish for stocks (and bullish for gold) if it breaks – click to enlarge.


6. Support/resistance in dollar-yen: This is an inverted notation, i.e., a rising level indicates a stronger yen and vice versa – click to enlarge.


7. A divergence between macro risk indexes and the SPX has lately developed (the index is a mixture of the Citi macro risk index, the Westpac risk aversion index and the UBS G10 carry risk indexes) – click to enlarge.

risk index


8. The Rydex ratio: (Nova/(Nova+Ursa)) remains ensconced in lala-land – click to enlarge.

Rydex total ratio


9. Spot gold breakout: A triangle pattern has formed that should soon result in a break – direction as of yet unknown – click to enlarge.

gold spot

 10. GTU’s discount to NAV recent decline suggests an upside move in gold is more likely – click to enlarge.

GTU-NAV discount

11. Enthusiasm in the gold sector is not just muted, it is non-existent – click to enlarge.


Rydex pm fund-1

12. The Coppock curve indicator suggests that gold should move higher over the long term, regardless of the next short term move. It has only turned up from similarly oversold levels two times before in history: in 1976 and 1982. On the first occasion a huge rally followed (+700%), on the second occasion the rally ‘only’ amounted to 100% – click to enlarge.




A big short term move in both stocks and gold is probably fairly imminent – big relative to recent moves that is. It is not possible to tell yet in which direction the breakout will be, but a number of inter-market signals may provide us with advance warning. At some point the fact that stocks are heavily overbought and over-loved, while gold is heavily oversold and widely hated is likely to lead to long term trend changes in both.

Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

* (Copyright © 2008-2014 – All rights reserved )

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One comment

  1. RE: “There will probably be an advance warning somewhere, in a corner of the markets that perhaps isn’t widely watched ”

    I disagree because I think that the chances are even better that there will be NO ADVANCED WARNING which would make buying PM’s at some future point very expensive if not impossible since a major downward change in the value of the US$ could result in most if not all of the current supply being bought seemingly overnight, since major large investors could use their fast computers to corner the market on all available stocks for PM’s, leaving small and even moderate investors unable to place future orders at any price without enormous fees.

    Such an event could be triggered by any one or more of the following:

    ☆ Civil strife in Kiev that leads to some type of modern war

    ☆ Sudden redirection of Natural Resources

    ☆ Another Nuclear Reactor Accident

    ☆ Major Earthquake

    ☆ Major Tsunami

    ☆ Astroid/Meteor strike

    ☆ Plague/Bio-weapon

    ☆ Relocation of major PM reserves

    ☆ Devaluation of one or more major currencies