3 Ratios To Watch

American Equities vs. Bonds are rallying in a downtrend, but approaching resistance.

The stabilization of Miners vs. Gold reduces deflationary worries.

Relative to gold, the 30Y is bouncing off long term resistance, but remains in an uptrend.

Signs of stabilization are emerging as these ratios exhibit mean reversion.

If volatility can stabilize, we may be setting up for a meaningful uptrend in equities. Nevertheless, it is still too early to commit anything more than a handful of dollars to equities overnight.

Monday Market Mumblings

The market is showing signs of internal strength.

There are more bullish stocks above the 50dma with generally lower volatility.

Advancing volume is much heavier than declining volume.

Judging by these indicators and recent price action, the tape is saying up, up and away. We are still in a long term bear market, but there is no reason to short these rallies yet.

On a side note, those fuckers at Citigroup are my new heros. I want to fuck things up so badly that the government has to hand me billions of dollars, and yet, maintain a multimillion dollar salary. They just don't teach that kind of shit at community college; long live the destroyers of wealth, for they give it value.

Mining for Gold

With Friday's big move in the shiny yellow stuff, a good deal of noise is being made about the future of the gold sector. Recent price action suggests that this is a rally in a bear market, and we're approaching overhead resistance. Moreover, the recent rise was substantiated by weak volume, suggesting little conviction amongst buyers. In its favor, the sector made a higher low in the recent wave of selling, which suggests relative strength to the overall market.

Fundamentally, there are many reasons to like Gold and its producers, things like the new Citigroup bailout come to mind. Nevertheless, if the credit crisis persists (read: Paulson's strong dollar policy), then gold's luster will remain tarnished. With questionable technicals and murky fundamentals, this is a risky long, and a potential short until further notice.