Gold Still Can’t See Its Way Clear, But The S&P High Looks In Place For The Year
2022.04.25 07:26
Gold Scoreboard
First Gold: A mere seven days ago we were singing Gold‘s praises as its price for two consecutive weeks moved higher in bold defiance of the otherwise Short weekly parabolic trend. we wrote; was Gold’s gleam.
But now a week hence, Gold has been reamed, recording its third-worst weekly change year-to-date in settling Friday at 1933. To be sure, we’re maintaining our forecast high for this year of 2254; but for the present—the evil, nasty, belligerent Short trend (as is its wont) seems pressing on price. Here are the weekly bars, the parabolic Short trend depicted by the four rightmost declining red dots:
Gold Weekly Bars And Parabolic Trends
The bad news is RUS state television’s promoting this past Thursday that the RS-28 Sarmat missile can level New York City; but the price of Gold, struggling to see its way clear, dropped anyway. The good news by the above graphic is that such Short trend really looks short-lived, for Gold’s broader bent across the chart clearly is to the upside.
Moreover, with the StateSide Money Supply (“M2”) having just now topped the $22 trillion level, our forecast for Gold 2254 seems given the yellow metal’s of 4088 as shown in the opening Scoreboard. But one year at a time. Further, we deem Gold’s gleam as the buy of a lifetime. To reprise the late, great Richard Russell: … especially with present at but 47% of present . Now as to the overvalued end of the spectrum…
Second the S&P 500: The mighty Index’s high for this year (4819 on 04 January) is from our perspective. Just as everything possible is positive for Gold, we find absolutely everything as negative for the stock market:
■ The recession-indicative yield curve is as flat as a pancake, be it 5-, 10-, or 30-year dough all yielding 2.9%, essentially double the S&P’s yield (per Friday’s 4272 settle) of 1.433%;
■ The Economic Barometer is a gyrating, recessive mess as we’ll later show;
■ Q1 Earnings Season is very poor on the notion : only 54% of S&P constituents’ earnings (thus far reported) bettered Q1 of 2021; post-COVID, Oops;
■ The “live” price/earnings ratio of the S&P is at present 35.7x whereas its lifetime mean (to which the p/e historically always reverts) is 38% lower at 22.3x;
■ And then technically there’s this negative MACD (moving average convergence divergence) crossover on the S&P monthly chart for the past five years… And sayonara 2022. Get ready to get ugly:
SPX 2017-2022 Monthly MACD
Oh that is one of your most salient comments there, Squire. This past week’s last two trading days netted the S&P 500 a combined loss of -4.2%. But the S&P’s MoneyFlow regressed into S&P points recorded a comparable loss of just half that at -2.1%. The interpretation? The crowd is alive and well, until they, too, begin to sell. So much for conventional wisdom, unless one has significant patience —> Per the “Friendly Reminder Dept.”, from October 2007 to April 2013 the S&P 500 did not make a new high, (just in case yer scorin’ at home).
Rather than assign a subjective percentage drop, whether measured from here (S&P 4272) or from the high (S&P 4819), ’tis our preference to assess price structure. And as we shared via text this past week: . In turn, that’s in perfectly reasonable— order for an overall correction from 26% to 34%. ‘Course, regardless of pose, nobody knows.
Still, in recent years we’ve mentioned the notion of the crash. So in that vein we today give a tip of the cap to Bloomy reportage in actually acknowledging this poor Earnings Season. And yet, Dow Jones Newswires continues to make reference to an (albeit all inflationary) StateSide . Does this look to you?
Economic Barometer
The only metrics of this past week were marginal improvements in March’s Housing Starts and Building Permits. The balance was a wind that blew for the month’s Leading Indicators and Existing Home Sales, along with April’s lower Index readings from the National Association of Home Builders and the Philly Fed. As for the broader graphic, ’tis a indeed. Cue Jerry Reed from ’71:
As for the FinMedia folks at large, our commendation to them for discovering the FedFundsFutures having already priced in a 50-basis-points rise per the Federal Open Market Committee come 04 May. We noted same three weeks ago in the 02 April missive, but ’tis better the news at least play ketchup than remain pickled, (sorry).
As to “The Now” for Gold, here next is the two-panel graphic of price’s daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. Therein you can see the near-term negativity as Gold’s “Baby Blues” of regression trend turn downward whilst price is pinned down near the bottom of the Profile:
Gold Dots Profile
And ’tis the same for Sister Silver, say no more:
Silver Dots Profile
Ahead of a critical week for incoming economic metrics, we’ll wrap it here with these three notes:
■ “Researchers” report that millions of ably-eligible folks are choosing “indefinitely” to remain out of the workforce. We find it curiously coincident with such choice that—going by S&P/Experian’s data on consumer credit defaults—they’ve just increased for the fourth consecutive month. Live by the credit card; die by the credit card.
■ One Tobias Adrian—The International Monetary Fund’s Director for Monetary and Capital Markets—expressed concern this past week over the risk for further selling in the markets such that we may That’s a quaint way of putting it, one has to say.
■ Ready for the Mother of all Metrics? Again with reference to it being a critical upcoming week for data from the economy, therein we’ll get the first StateSide reading of Q1 Gross Domestic Product. The consensus is for a vastly reduced annualized pace of only +1.1%. But here’s the killer: the consensus for the associated Chain Deflator is .
