Market Update For Late August

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In gold’s step sum chart below, market reality (the price of gold / blue plot) continues an advance that began last summer (July 2018), with market sentiment (red plot) falling in line. That’s not how it was from February to June of this year, when a small decline in the price of gold resulted in a disproportionate number of down days. 

But with June all that changed, with gold and its step sum advancing nicely since.

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The Dow Jones (Blue Plot) in its step sum chart below won’t go up, and apparently can’t go down either as market sentiment (Red Plot) continues to rise. After the 18% correction from October to December of last year, I’d have thought the Dow Jones capable of doing much more to the upside, but it hasn’t. This struggle to climb above into the 30Ks has been going on since January 2018. Why is the Dow Jones still trading in the 25K range?

I don’t know, but such lackluster market action doesn’t inspire confidence the bulls are going to accomplish much in the months to come.

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Gold closed at its highs of the past twenty-five trading days. Its step sum is advancing, and daily volatility has increased from 0.49% at the end of July to close the week at 0.54%; all positive indications of better things to come in the gold and silver markets.

On the other hand the Dow Jones struggles. Since July 22 it’s seen more down days than advances, which isn’t necessarily a bad thing. Markets can see big advances during periods of overwhelming daily declines; but that isn’t what the Dow Jones is doing. No, it’s trending down and that isn’t good.

Summing up this week’s market action; gold and silver investments are acting much better than is the Dow Jones, my proxy for the broad stock market. That said, in late August it’s hard coming to grips with the potential these markets have for investors, the potential for losses in the stock and bond markets and the potential for gains in precious metals.

But with the markets there is always the next day, week and month. Come September we’ll discover answers to questions we found so perplexing in August, while the markets create even more questions that demands answers from us. But if you’re a market buff, as I am, that’s what makes following the markets so much fun.

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