Today’s gap down in the stock market shows how futile it is to try to buy bottoms on technical levels, like the 200-day moving average on the S&P, until there is a real panic washout.
That type of buying works for sure when the market is in a powerful bull market, but it doesn’t after you reached the start of a big stock market cycle shift. That’s why bonds are now soaring in price and weak individual lagging stocks are now falling out of the sky.
There are two types of stock market players right now.
There are people who are ignoring all of the news and all the changes in the market trends and are simply holding on to stocks like Apple or Tesla thinking that they MUST go up while they ignore what is happening and get punched when the market has another own day, because these are laggard stocks.
And there are people moving into what is working and winning.
We saw agriculture commodities make what looks like a crash bottom this month and that is a sign for the smart trader to open their eyes to see what might jump up and come alive next.
So look at this chart of gold, because gold is now positioned to breakout of this triangle pattern on a close above $1,300. That would make gold stocks go up more and likely signal a run up to $1,350.
The relative strength ratio on the bottom of this chart shows that gold started to outperform the stock market in October once the S&P 500 rolled over and it started to do it again this month too.
Gold went up from October to New Years as the S&P 500 fell 20% and it looks like it is getting ready to begin another nice rally.
Gold went up this week along with agriculture commodities and bonds.
Can gold now breakout and begin to soar like they are?
Focus on what is going up and avoid lagging stocks no matter how popular they are!
Robinhood lists the 100 most popular stocks on their site ranked by the number of people who own them. Number 4 is the Apple laggard and at number 10 is Tesla – even though it lost over $700 million in its last quarter and is on the road to bankruptcy.
There is only ONE gold stock on this top 100 list and it’s AUY way at the bottom.