by JDH on June 15, 2013

The weather is nice (where I am),  and there’s not much happening in the markets, so for today, three charts.  First, gold:


No matter how you draw the chart, gold is in a down-trend.  The only real question is “are we at the bottom?”  Perhaps.  The chart has an obvious double bottom, so we may have seen the worst.  Or not.  Either way, I sold out of the money calls against most of my blue chip gold stocks, and I assume on Friday they will expire worthless, so at least I am earning a small return while those stocks languish.

Now, the Dow.


On Wednesday and Thursday the Dow touched the 50 day moving average before recovering to close higher. On Friday it closed at 15,070, a touch above the 50 day moving average of 14,990.  The high was reached on May 28 at around 15,409, so the Dow is around 400 points below the high.  Do we get a sustained uptick to new highs in the coming weeks?  Or has Fed money printing done all it can do?  I don’t know, but the RSI and MACD don’t look great, so I wouldn’t be betting on long at this point.  Of course I also wouldn’t bet against the Fed.

Final chart:


This is the NYAD, the NYSE Advance-Decline line, on a cumulative basis, for the last year.

It is interesting to observe that while the chart of the Dow itself is looking good, the advance-decline line looks much worse.  The 50 day moving average was violated at the beginning of the month, and we continue below it today.  The RSI at 42.94 is very low, and the MACD is at it’s low point for the year.

It’s hard to argue that we are in a bull phase of a bull market if there are a lot more stocks declining than advancing.  Is this the warning of trouble ahead?

Again, I have no idea.

I have consistently expected gold to advance and I have expected weaknesses in the markets, I have been totally wrong.

But I still expect reality to take hold at some point, and perhaps it will be this summer that the Dow finally succumbs to the lousy true fundamentals, like high real unemployment and high debt.  This could be it.

So, I hold my gold, avoid going long in the market, and wait.

And, more importantly, I’m heading out for a 10 km run.  On a beautiful day like today, there is little to be gained by sitting at a computer screen.

Enjoy, and see you next week.