Replies to post #9456 on Sector Investing

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So much for Mark Hulbert - The latest numbers from Investors Intelligence barely changed:

http://www.schaeffersresearch.com/streetools/market_tools/investors_intelligence.aspx

 
 Date Published   Percent Bullish     Percent Bearish 
         08/17         46.2                 23.7

As for AAII?

Investors Turn More Bullish into Decline...Again
Thursday, August 18, 2011 at 09:35AM
With stocks down sharply in the last two weeks and volatility on the rise, you would think that investors would be throwing up their hands and just giving up. Not so. This week's survey from the American Association of Individual Investors (AAII) showed that bullish sentiment rose for the second straight week from 33.4% to 35.6%

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USD vs. the USD - Gold Bugs Ratio vs. the $HUI - Gold (the metal) ratio vs. the $HUI:

Note the chart in the middle which is the US Dollar/Gold Bugs Ratio. There is an inverse relationship between the US Dollar and Gold Stocks that shows up in these charts. Any spike too high in this ratio towards the upper Bollinger Band is likely to result in a rally for gold related stocks but be careful if the USD is rallying strongly this will be bad for gold stocks. Of course the reverse is true too so watch out if you want to remain long gold stocks when the ratio gets too low. The bottom chart shows the ratio of Gold (the metal) to the $HUI (Gold Index). Gold and gold stocks do not move at the same rate most of the time creating another system by which predictable moves in the stocks may be seen in advance. When gold outperforms the stocks then the chart moves higher. Conversely when gold stocks are outperforming the metal then the chart moves downward. Watch the Bollinger Bands for potential turns for the stocks in the group. If the chart moves too far downward then it may be that the rally in gold stocks is not being supported by higher gold prices.







3 Year Charts showing the long-term inverse relationship between Gold and the US Dollar.




The BP Index of the Materials Sector versus the XLB while showing the long-term relationship between the falling dollar and Gold’s appreciation.