Figure 1 is a monthly chart of gold. Gold remains somewhat extended above its 10 month moving average, which will likely catch up to price before the precious metal moves higher. Gold remains in a bull market, but it will need some time to consolidate the gains seen in 2007 and 2008.
Figure 1. Gold/ monthly
Gold Mining Sector
Figure 2 is a monthly chart of the Philadelphia Gold and Silver Mining Index (symbol: $XAU). The precious metal miners index is bullish, and with the ratio of gold to $XAU greater than 5 to 1, and with real interest rates negative, the dynamics for a sustainable price move are in place.
Figure 2. $XAU/ monthly
Figure 3 is a monthly chart of the Dow Jones US Steel Index; this is another chart I have been featuring over the past month. This remains bullish.
Figure 3. $DJUSST/ monthly
Dow Jones Utility Index
Figure 4 is a monthly chart of the Dow Jones Utility Index. With the monthly close
Figure 4. $DJU/ monthly
below the prior pivot low (i.e., the "M" type top), I became bearish on utilities. Recently, prices are perking up and this may reverse the potential down trend. Let's wait and see where prices are at the end of the month. Initially, I thought the weakness in utilities was a sign that higher yields on long dated treasuries were imminent, but this view seemed inconsistent with the technical picture seen in treasuries. Long dated bonds are nearing there all time highs, and many are calling for higher yields and lower bond prices. Bonds are overvalued (relative to equities), yet despite this, it would not surprise me to see yields lower (higher bonds even still).
Maybe this is the new message of the potential reversal seen in the utilities. As stated, let's wait until the end of the month for clarity.
Figure 5 is a monthly chart of the AMEX Oil Service Holders (symbol: OIH). A difficult chart to interpret, but one thing I am pretty sure of: a monthly close below $170 and the bull market for OIH is finished.
Figure 5. OIH/ monthly
Figure 6 is a monthly chart of the S&P Select Energy Fund (symbol: XLE). The green arrow highlights the breakout bar seen about a year ago. The action has been sloppy, but it would not surprise me to see XLE travel within the confines of this new trend channel. A monthly close below $73.67, and the bull market for XLE is over.
Figure 6. XLE/ monthly
Figure 7 is a monthly chart of the Semiconductor Index (symbol: $SOX). Old support is now resistance and this is at the 385 level.
Figure 7. $SOX/ monthly
Figure 8 is a monthly chart of the Biotechnology Index (symbol: $BTK). This chart has many bearish elements including a close below a prior pivot low, a trend line break, and multiple negative divergences. Once thought as "safe but with growth" and therefore "better" than big pharma, there is nothing pretty about Biotech.
Figure 8. $BTK/ monthly
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Guy M. Lerner may be reached at email@example.com.