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Bearish Technical Clue in U.S. Stock Market Could be Boon to Gold, Silver Bulls
Friday October 18, 2013 2:44 PM
(Kitco News) - The weekly continuation chart for nearby S&P 500 stock index futures shows prices are in a solid uptrend. Prices this week just hit a new record high.
However, this major bull market move in U.S. equities is "long-in-the tooth." The very mature bull market in stocks strongly suggests most of the upside price action has already occurred in this present price uptrend.
Another way to put it: The easy money in the bull market in U.S. equities has already been made.
See at the bottom of the S&P 500 weekly chart that the Relative Strength Index (RSI) has shown declining values (and is trending lower) even though the actual S&P stock index prices have continued to trend higher. This is called "bearish divergence" and it's an early warning signal that the stock index bulls are losing steam, even though prices are still in an uptrend.
A drop below the technical support line seen on the weekly S&P chart would be another signal the major bull market move has run its course.
Importantly, when the U.S. stock market does run out of gas, money will then begin to flow out of stocks and into other asset classes, very likely including the raw commodity sector--and gold and silver. Raw commodity market bulls are eyeing this weekly S&P chart and licking their chops.
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By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
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