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Gold-Silver Ratio Argues That Bull Relief May be Brief

|Includes: DIA, GDX, GDXJ, SPDR Gold Trust ETF (GLD), QQQ, SLV, SPY

This is the GSR chart first introduced 21 weeks ago in NFTRH120 and reviewed routinely since.  It showed the breakdown from the would-be inverted H&S, which ignited the huge bull trade late last summer.  It was at that breakdown point that NFTRH dropped the caution stance and went unhedged bull.

We then followed week after week of relentless declines in the GSR (noted by the cluster of blue ovals), in an attempt to be Johnny on the spot for the moment the backdrop changed.

Of course, there were the 'bad cops' Plosser, Fisher and Bullard to deal with.  There was the 100 month EMA on the 30 year bond yield in danger of breaking and a host of other data points, not least of which was over confident sentiment by dumb money like individual investors, newsletter writers and NAAIM investment managers.

Well, the dumb money is now bearish so the market is indicated to have an important piece in place for some kind of rebound.  But the GSR, among several other things I am looking at - like nominal technicals - tell me this rebound might only be enough to reset sentiment a bit before continued declines across asset markets.  Lyin' Larry's pumping, the Fed is sure to offer a few breadcrumbs this week and the relentless bearishness may get a mini break.

GSR however, rose impulsively from the red oval and persists just below thick resistance.  The pumpers have not been able to QE3 the GSR back to the perceived hell it came from.  Really though, the GSR is just a reflection of the system's most recent honest attempt to cleanse itself of the toxins routinely injected by policy makers.

Stay tuned.

Edit (A couple minutes after posting):  This is too funny:  'European Stocks Rebound on Greek Bailout Optimism'.  Yesterday on the blog"The broad asset spectrum probably needs a bounce with the Greek 'will they or won't they?' b/s serving as an excuse"