FMX | Connect – www.fmxconnect.com - (Reported 5/11/2010)
The following is an excerpt from the Commodity Trader’s Chart Book by Dan Wantrobski.
We have struggled with the shorter-term ranges that this precious metal has presented us with over the last few months. Nonetheless, the long-term relative strength trends (as we pointed out in our gold piece yesterday) remain bullish against the S&P. The commodity markets transitioned from a deflationary bear market into a deflationary bull around the years 1998-2000. Since that time, commodity prices have risen against the backdrop of low interest rates- all while the equity markets have been range-bound. The RS charts of gold vs the S&P appear to be rallying off their rising 30-month moving average (red line above), and a longer-term trend line beneath that indicator suggests the secular relationship between gold and equities remains intact- and that it still favors gold in the years ahead.
We have stated in prior reports that we like the action of crude oil prices against a stronger dollar- and maybe more so, we like many of the bases that are building within the energy stocks. Nonetheless, this group has been underperforming the S&P on a relative basis since mid-2008- and it is currently approaching a long-term trend line that is in place since the year 2000. If we see a meaningful break of this key trend line going forward, we will have to re-think our energy call.
Full Credit to:
Dan Wantrobski, CMT
Janney Montgomery Scott LLC
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