As we prepare to move into October, I wanted to take a moment to highlight some of my recent daily columns from September.
On September 13, I wrote a Daily titled “Why Higher Inflation Matters and Transportation is Key”. In it, I highlighted that the transportation sector and the high-yield bond market would telegraph where the stock market was headed. The following day, on September 14, I wrote another Daily titled “The Market Stabilizes While Transports Hold Their Breath”, which reiterated the need to keep an eye on the transportation industry (IYT) as a gauge of the health of our economy.
The next evening, September 15, FedEx made a shocking Thursday night earnings announcement about a massive quarterly loss and the withdrawal of financial guidance for the rest of the year. As of Tuesday, IYT led the entire market lower.
Then, for last weekend, I wrote a column titled “The Biotech Sector Should Come Back First”, and I explained that biotech, as represented by IBB, should be on your shopping list. On Wednesday, Biogen (BIIB) skyrocketed by 39% today, due to their Alzheimer’s drug being successful in a late-stage trial. That, along with the QE announcement by the BoE, sparked a major rally.
Yet, what about commodities?
I also wrote a column entitled “Is Silver About to Outshine Gold?”, where I explained that, when analyzing the trend or a trade-in gold (GLD), it’s a good idea to look at Silver (SLV), because trends in these metals tend to be reliable when they are in sync.
The Gold/Silver Ratio
The Gold/Silver ratio measures the amount of Silver it takes to buy one ounce of Gold. Looking at the above Gold/Silver ratio since 1980, one can quickly identify the highs and lows.
Since the ratio has been published, it has only been above 95:1 three times. The first time was in the early 1990s. Today, it was at 95:1 intraday, ultimately closing at 89:1. The Gold to Silver ratio is at historic lows.
Hence, I leave you with one more dose of free wisdom to consider silver and why it might outperform gold in the coming months.
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Mish’s Upcoming Seminars
ChartCon 2022: October 7-8th, Seattle (FULLY VIRTUAL EVENT). Join me and 16 other elite market experts for live trading rooms, fireside chats, and panel discussions. Learn more here.
The Money Show: Join me and many wonderful speakers at the Money Show in Orlando, beginning October 30th running thru November 1st; spend Halloween with us!
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Mish in the Media
Mish talks putting your cash to work in this appearance on Business First AM.
Mish and Neil Cavuto discuss Central Bank credibility, US policy and more inflation to come on Fox Business’s Coast to Coast. Unless this is a spectacular bottom, preserving cash is smart.
Read Mish’s latest article for CMC Markets, titled “When to Put Cash Back to Work“.
Mish talks about key averages, yields and commodities on this appearance on Bloomberg TV.
A business cycle is about 6-7 years – where are the indices now and what should you watch for? Mish discusses this question in this appearance on Fox’s Making Money with Charles Payne.
ETF Summary
S&P 500 (SPY): Right into resistance; however, with an impressive reversal bottom.Russell 2000 (IWM): Cleared some resistance, but still needs to prove it can hold now about 167.Dow (DIA): Right into resistance and still the weakest of the indices–300-301 needs to clear.Nasdaq (QQQ): 280 has to clear, 273 now major support.KRE (Regional Banks): Inside day right at the pivotal 60 level.SMH (Semiconductors): Holding key support, but needs to clear 198-200.IYT (Transportation): Mean reversion-impressive hold of the monthly MA, 210 now major resistance.IBB (Biotechnology): Biogen helped this; if the bottom is in, needs to hold 117.XRT (Retail): A nice looking bottom, provided it clears 62 and holds 57.
Mish Schneider
MarketGauge.com
Director of Trading Research and Education