Tuesday, April 2, 2013

Tides, Traps & Stairs

As we have followed over the past year, the secular cycle dynamic between the RUT:SPX and the US dollar index continues to play out along similar lines. Like the previous turn in the 1990's, the USDX has led the pivot as the "primary tide" - with the SPX taking the pole and outperforming the RUT as the "secondary tide". 
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While still early in the week, the ratio looks to be rolling over hard as it did last year and as the comparative pivot performed in 1996. Take the stairs up and the elevator down - is often where alpha is either captured, built or lost in the stumble. 
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Although there exists a lag in tides like the previous turn, it is largely to a much lesser extent as expressed below in the 50 week EMAs.  
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As expected, volatility has increased in the precious metals miners, as they continue to work towards another Blue-Light Special. The GDX:GLD ratio made a new closing low today - with considerable potential momentum remaining on the downside. 
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This perspective is buttressed by our Nikkei/Silver comparative, which has presciently guided us in patiently walking the stairs lower in silver for quite some time. 
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*  All stock chart data originally sourced and courtesy of www.stockcharts.com 
*  Subsequent overlays and renderings completed by Market Anthropology