Gold Grips As The S&P Dips

With time again at a premium, let’s efficiently dig into Gold. Given what we sense is the beginning of the far overdue (and appropriately pre-midterm elections timed?) correction for the S&P 500, one might have expected Gold to get more than just a +1.2% grip this past week, settling Friday at 1222. The S&P was -4.1% for the week. To be sure, to get Gold to budge upward with any alacrity at all these recent months has been a stark, often stunning, impossibility.

And yet, history shows us that similar stock market sell-offs don’t necessarily send Gold soaring: this past week was the 40th millennium-to-date in which the S&P has recorded a net loss of at least -4.1%; for those 40 weeks, Gold’s median gain was the same as ’twas this past week: +1.2%. Par for the course.

So to turn to Gold’s weekly bars, as small as this past week’s up push may seem, the rightmost blue dot of parabolic Long trend is less “flat-lining” than its recent predecessors, and price itself looks poised to penetrate the otherwise declining dashed trendline toward making a run to visit the Box (which as you’ll recall is the purple-bounded 1240-1280 zone):

Of course, further fallout in the S&P can be Gold-supportive. Phrases from the past week’s Prescient Commentary depicted key S&P levels as follows: “…from the all-time high of 2940 (22 Sep) the 5% correction was passed by yesterday [10 October] at 2793, the 10% correction would arrive at 2646, and ‘our’ full (once 25% now 27%) correction remains targeted for S&P 2154 … and [en route] the critical hold area essentially is the 2500s…”

Thus as we go to the Economic Barometer from a year ago-to-date, it is somewhat gratifying to see the S&P (red line) starting to come (down) to its senses rather than continuing to defy the declining blue line and still unconscionably high price/earnings levels, (our “live” reading for the S&P presently at 48.9x). It may be Trump in this corner and Powell in that corner, but the Baro was not helped this past week by a buildup in August’s Wholesale Inventories, a slowing in September’s Consumer Price Index, and October’s University of Michigan Sentiment Survey slipping below the vaunted 100-level. Here’s the result: