SGR flipped over...

The gold-silver ratio had been in a similar but larger bullish pattern to the one from August-October.  It sneaked out of it and popped upward to resistance over the holidays.  B/s or no b/s (as to holiday activity), it has qualified for having hit a target I guess.  So the magnet of 60 is no longer a necessary force.

With important longer term EMA's turning up and GSR's residence above the 50 day moving average, it is still considered a negative divergence to the rally.  But when looking at risk vs. reward over a bigger picture, things are changing.

Think about how many high profile analysts are flat out bearish.  I read somebody the other day writing about David Rosenberg's great call on rising Treasuries in 2011, and calling for lower rates still in '12, Richard Russell "Instructions: be out of ALL stocks...", the "Clive Maund is uber bearish" emails I get.  Then there is Prechter, scaring half the listeners to death on Goldseek's radio show and all over the media.

There is a time for all this stuff, and yes, I still lean toward the coming of an interim downside problem pending the completion of the rally.  But what comes next, both in policy and in market response, later in 2012 is what I am most interested in.  Many indicators like the GSR (or the view of SGR shown yesterday) are indicating that on a risk vs. reward basis at least, the doom and gloom crowd is getting itself extended.

I still think SPX 1340 has a decent chance of happening.  Then it is evaluation time.


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