Mish's Market Minute

Who Says Gold is Topping?

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MarketGauge has some pretty cool proprietary software.

One indicator is Triple Play, which measures the ratio between a particular instrument and a benchmark. Triple Play reveals the true trend strength of a market based on "price leadership" and "volume power." This measure of the market's health gives you an advantage that other traders don't have.

For example, many are calling for a top in gold. Others have already taken profits and are now in the position where they must chase to reenter. Still others are using relative strength to reason that gold is overbought and must correct.

The Triple Play indicator shows us that gold will continue to trend. Here's why.

First, a word about Junk bonds.

In the last daily, I mentioned that JNK is a great way to time the market. If JNK breaks the 200-WMA, then perhaps we can confidently say the move up is over. However, as of today, JNK has moved up, further thereby signaling no end in sight to risk appetite.

Regardless, gold has something else to say entirely.

Have a look at the middle box of the chart. That shows the ratio between the S&P 500 and Gold. In 2011, gold reached a price of $2000. The ratio between SPY and GLD was at 1.57. Today, with gold trading at or around $2000, that same ratio is at .57, one-third of where it was in 2011.

What could that mean? Well, it could mean that gold is still well-undervalued relative to SPY, and the ratio can double or triple from here before we hit 2011 levels. Think about that top pickers!

Hot off the press - here's some recent interviews I conducted with Yahoo Finance (on July 29th) and Business First AM's "Trader Rundown" (July 28th).

Yahoo Finance 07-29-20: https://finance.yahoo.com/video/markets-higher-ahead-big-tech-143947402.html

Trader Rundown 07-28-20:


  • S&P 500 (SPY): 323 now pivotal support if good
  • Russell 2000 (IWM): Cleared the 200-WMA and now has 150 resistance
  • Dow (DIA): 270 now resistance, 262.50 support
  • Nasdaq (QQQ): 262 resistance with support at 250
  • KRE (Regional Banks): Unconfirmed recuperation phase. 38.31 must hold to confirm
  • SMH (Semiconductors): 165-168 resistance, 160 support
  • IYT (Transportation): Back to an unconfirmed accumulation phase - 172.55 must hold
  • IBB (Biotechnology): 142 resistance, 136 support
  • XRT (Retail): New 2020 highs today
  • Volatility Index (VXX): Not a new low, but may be a double bottom - 27.75 major support along with an inside day
  • Junk Bonds (JNK): Risk appetite on 
  • LQD (iShs iBoxx High-Yield Bonds): 137.50 support


Mish Schneider

MarketGauge.com

Director of Trading Research and Education

Mish Schneider
About the author: serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision. Learn More
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