A look at the long-term (monthly) chart shows gold undergoing a correction before encountering support at $1650/ounce. Recovery above $1700 would re-test resistance at $1800, the higher trough suggesting resumption of the primary up-trend. Breakout above $1800 would confirm. A 63-day Twiggs Momentum trough close to the zero line would strengthen the signal, while reversal below zero would suggest that the 5-year bull-trend is over and a test of primary support at $1500 likely.
Commodity Prices are a good predictor of stock market performance. Dow Jones-UBS Commodity Index retreated from 150 but support around 140 would indicate another attempt at a breakout — and recovery above 144 would strengthen the signal. Rising Twiggs Momentum suggests a primary up-trend but only breakout above 152 would confirm.
How does this commodity index predict stock market performance?
Rising demand for commodities signals economic recovery.
Re. Twiggs comment:- Respectfully, economic recovery and rising stock market not always synonymous. Also, over last 12 months = almost no correlation. Similarly, with stock market near highs, why is commodity index so low = further indication of very unreliable indicator of stock market performance?
Strong correlation between s&P 500 and CRB Commodities Index since early 2000s. Divergence over last year — is this a warning? Or proof that correlation is over?
Twiggs, your initial comment = “Rising demand for commodities signals economic recovery”. So, does one not need therefore to put up the charts of ‘GDP economic recovery” vs ” stock market performance” (ie. not the ones displayed). Regards.
I don’t have a chart available for GDP (real or nominal) so used the S&P 500 as a surrogate.
I believe the bull market in Gold is 12 years old , not 5 as stated!
It depends on how you want to treat March to December 2008.