The multi-year outperformance of US equities relative to gold is beginning to show signs of a correction, as prices settle back from the year low of May 2006, says Mike Macdonald at XATSUK. Trendline support from August 2013 is now being pressured, with potential for a further break of the July 2015 low as negative divergence continues to unwind on the falling RSI.
A break of the December 2014 low on the momentum indicator would turn equity sentiment negative and lead to a more significant price correction as investors rotate assets out of US Equities and into gold. Investors are moving to a neutral stance and further downgrade if prices close below the July 2015 low. www.xatsuk.com.