Alternate Universes

Equity markets mostly recovered from an early swoon this week buoyed by stellar performance from digital tech giants while safety plays got ignored. The NASDAQ 100 closed +4% for the week and up 25% YTD, but the Dow Industrials closed down -.15% for the week  and -7% YTD. So much for the Dow being blue chips, maybe we change the label to red chips.

Meanwhile, gold and silver continued their upward trajectories leaving breakaway gaps in their wake……so where is the selloff in precious metals that many pros and pundits are looking for?

Considering that the Gold/SPY ratio is around 1/3 of where it was when gold hit it’s highs in 2011, and gold currently represents less than 1% of the holdings in most portfolios, it seems the fun is just the beginning. Adding more fuel to the fire, the price of Gold (GLD) and Silver (SLV) verses the M2 money supply is at record low levels.

This week’s highlights are the following:

  • Risk Gauges are still in risk off mode
  • NASDAQ 100 (QQQ) roared on good earning from tech giants while weekly momentum in S&P 500 (SPY) improved
  • Market Internals point to bad Breath, & Sentiment Indicators are also showing weakness
  • Grandpa Russell (IWM) tested key moving averages and managed to close above them by Fridays close, but is still down -11% YTD
  • Precious Metals continue their run with no end in sight
  • Soft Commodities (DBA) look to have broken out of a 5-month base and a descending weekly channel
  • US Bonds are quietly gathering steam for a blow off rally

There are two worlds with opposing realities. One is a world of companies that prosper during the current chaos and the accelerated shift to a digital economy and another world that falters with companies that do not adapt.…… and both are very real.

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