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Markets are about to go 'biblical'; this key indicator is signaling major moves - Michael Gayed

Kitco News

The lumber to gold ratio is a good leading indicator for market volatility, and right now, the data is pointing to a repeat of last summer when cryptocurrencies corrected and troughed around July, said Michael Gayed, portfolio manager and publisher of the Lead/Lag Report.

“It tends to be a precursor to higher volatility and risk-off and a potential Black Swan event,” Gayed told David Lin, anchor for Kitco News.

2022 is a year of capital rotation from growth stocks into value stocks, Gayed added.

The percentage of stocks in the NASDAQ composite that are trading above their respective 200-day moving average has declined to a low, indicating a massive market move up ahead.

“So this goes back to the ‘biblical’ point. You could have mean reversion where either large caps catch down to everything else to that deterioration, to that capitulation, which would be a pretty violent move, or equally opposing violent move [would be that] all the small caps, emerging markets, all the speculative areas which got decimated last year start to run,” he said.

Gayed says the probabilities are in the small cap stocks’ favor.

For more information on Bitcoin, watch the video above.

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