Weekly Update 30 Aug 2019 Dow Sell Signal
This week, national currencies, bonds, and cryptocurrencies fell, while stocks and commodities were mixed. The largest gains were in the precious metals, as platinum rose 7.9% to close at 19.0 grams and silver advanced 5.5% to 372 mg. The largest losses were in cryptocurrencies, as Ethereum dropped 14.7% and Bitcoin fell 9.3%. The Dow closed the month below its 36 month moving average, flashing a sell signal (see more below).
The US and Canadian dollars were the winners among the national currencies, falling 1.6%. The Chinese Yuan fared worst, dropping 3.0%, followed by the Euro which was down 2.5%. The British Pound and Swiss Franc (not in table) did about the same, dropping 2.4% each. Bonds were also lower, as the short term SHY fell 1.6% (in line with USD cash) while the long term TLT performed better, giving up 0.7%.
Cryptos were put through the ringer again this week. Ethereum was hardest hit, starting the week just above 4 grams, it worked its way down to a low of 3.42 grams on Thursday, then recovered to end the week at 3.49 grams, off 14.7%. Bitcoin followed a similar path, but ended down 9.3%. On a longer term note, Bitcoin (along with gold stocks and palladium) is one of the few assets that is still higher than it was one year ago.
The Dow Jones Industrials were the strongest equity index, rising 1.4%. Japan's Nikkei index fell the most, dropping 1.8%. Gold stocks were also off, closing down 0.7%; however over the last year, they have risen 24.5%, the largest gain of any asset in the table. For many years I have been tracking the Dow Industrials against their 36 month moving average, and have found that it makes an excellent long-term trading indicator. It went short in Sep-2001, around 1140 grams, and stayed short until Feb-2013 at about 260 grams. Aside from a brief whip-saw in 2016, the indicator has been in buy mode since then… but has now, at about 537 grams, switched back to sell mode.
Commodity gains were limited to the precious metals, as platinum rose 7.9%, silver gained 5.5% and palladium added 3.3%. Copper had the largest drop, falling 1.7%.
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