Chart for the Day
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Featured is a chart that compares the stocks from the S&P 500 Index, to the Mining Stocks of the HUI Index.
The chart pattern is an Advancing Right Angled Triangle (ARAT). This formation usually breaks out at the top (blue arrow). The moving averages (blue and red lines) are in positive alignment and rising. This lends support to the expectation that the breakout will occur. If and when the breakout occurs, it will mean that generic stocks will continue to outperform mining stocks, just as they have been doing since September. However, the supporting indicators (RSI, CCI and ROC) are neutral at the moment, and if they turn negative it will mean that the brown resistance line, in effect since January, is holding. In the event that this leads to a breakdown at the green arrow, it will mean that mining stocks are outperforming generic stocks.
This chart is ‘one more tool in the toolbox’ and should be looked at once a week for guidance.