Gold and silver, and gold mining and silver mining equities, including small caps and explorers, continue on Avoid. In this article, we look at The Gold ETF $GLD (GLD), and, The Silver ETF $SLV (SLV) , relative strength versus The S&P 500 Index $SPY (SPY).
The S&P 500 Index ETF (SPY) is trading in excess of 40% annualized over the 50 day moving average, and, in excess of 30% annualized over the 200 day moving average. The Nasdaq 100 Index ETF $QQQ (QQQ) is trading above The SPY on both averages.
Both The Gold ETF (GLD), and, The Silver ETF (SLV) are trading under the SPY on both the 50 and 200 day averages. A trendinvesting, or trendfollowing, sign of strength, while the S&P 500 Index ETF (SPY) maintains an Uptrend, or Bull Market, gold and silver would gain relative strength, trading over the SPY on a 50 day average. That’s just one way to do this. There are many other ways.
The S&P 500 Index (SPX) $SPX relative strength tends to hug and bounce off of a 30% annualized rate growth over a 200 day average. When it dips below, it is vulnerable to a correction and/or consolidation. As of Fridays’ close the index is 1.1% above this trend. See chart below. Comments welcome.
The S&P 500 Index ETF (SPY) $SPY closed the week tracking along the 50 day moving average in excess of 30% annualized, and along the the 200 day moving average in excess of 30% annualized. So we’ll establish the 30% annualized as a benchmark, and compare Europe, Asia, and Latin America ETFs.
This table compares ETFs vs. the 30% annualized model:
May 19th was recent the top in The Gold Miners Index (GDM). From the March low, the Index was outperforming the S&P 500 Index on a relative strength basis. The Index is down, on a closing basis, approximately 13%. From the May 19th top, before the FOMC Press Conference June 16, 2021, the index gave four new 5 day lows, before the first of three new 21 day lows, on June 16th .. the mini crash. So for some investors and traders, this is significant, and for others completely meaningless. At a very minimum, stocks almost always show signs of weakness well in advance of trouble. Most of the time these indications happen well in advance of “news”. Mr. Market knows. The most successful trend-followers follow price action and not news. Investors and traders who are addicted to news and message boards under-perform, because, news follows the market.
So where are we now? As of the close, on Friday, July 2nd, looking for Bullish new 5 day highs and/or new 21 day highs, and Bullish relative strength vs. the S&P 500, or at least a positive annualized growth rate, The Gold Miners Index has indicated none of these..yet.
The S&P® Oil & Gas Exploration & Production ETF $XOP (XOP) Long and Bullish, has been consolidating since the high on June 25th, now looks to be gaining strength again, as the price of crude oil apparently is headed higher.
Today, before the close at $99.23, there is resistance from last week at $100.07.
The XOP oil and gas stock ETF relative strength is trading 7.8% above the S&P 500 index over a 50 day moving average, and 28% over the S&P 500 Index over a 200 day moving average.
Scanning the S&P 500 list of stocks, there are today, 38 stocks trading in excess of 100% annualized rate of growth, over a 200 day moving average. A good portion are energy producers. Here’s the list:
The Dow Jones Industrials Index $DJI DJ-30 broke the 3 month sideways pattern last week at price level $34,216.00. .. as indicated on the stock chart below. So, we’ll see what happens if it gets back up there and what it does. Similarly, the S&P 500 Index $SPX SP-500 has a reversal area at $4,172.00. Failure to hold these price areas on both indexes may be the start of regime change. .. at least for the next few months.