Trends

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For Gold Bulls the Disappointment Continues

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As you can see in the ratio chart (middle pane) below that gold’s out-performance against the SP500 came to an end in 2012 when the ratio broke both the upper red horizontal and blue uptrend line simultaneously. Since that time the SP500 has been kicking tail as it has outperformed gold by ~45%.  We can also see that the ratio has been consolidating sideways since 2015, bouncing between the upper and lower channel providing gold bulls hope a turnaround was in the cards.  Unfortunately, it was not to be as you can see support finally gave way to the down side last month.  

Ratio charts are a great way to view relative performance but ultimately help decide which to commit your investment capital to (assuming achieving the best returns are what you desire). In the choice between gold or stocks, the chart is sending a strong message that stocks are the place to be. Like all trends this will eventually change, but until then there is no reason at this time to be (over)exposed to gold.

san ramons best cfp retirement planning fiduciary investment advisor - gold bulls 12-11-17.png
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All the Right Moves?

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All the Right Moves

While this chart does not show it, Inphi Corp., IPHI, a semiconductor company right here in our backyard rose almost 600% from the end of 2012 until the beginning of this year. Since peaking early this year, it fell 35% and then began to consolidate sideways (underneath blue horizontal resistance zone) bouncing between $32 and $41/share.

san ramon fee only cfp retirement planning investment advisor 11-29-17 iphi.png

Interestingly, last week it broke and closed above resistance on higher than average volume. Since then, as quite often happens, price is back-testing that same level testing support on lower than average volume.  Yesterday closed with a hammer candle which, if we get confirmation in the next few sessions, indicates at least a temporary bottom. A breakout from this horizontal pattern indicates a price target back up to January’s highs which is more than 22% higher.

A price correction followed by at least a six month consolidation, a breakout on higher than average volume with a back-test of support is an almost perfect setup from this technicians view. A hold above support provides a compelling argument for additions to patient, risk tolerant investor's portfolios.