Investors could be in able to find positive returns in gold as the S&P 500 enters in a historically difficult month, CNBC’s Jim Cramer said Monday.
“The charts, as interpreted by the legendary Larry Williams, suggest August could be a tough month for the S&P 500, but a great month for gold. since big image background in this moment, it wouldn’t surprise me one bit, “said the” Mad Money “host.
“Remember, during the original debt ceiling debacle a decade ago, the title market Broken down and … gold did it great, “Cramer added, alluding to fact a two-year Suspension of the debt ceiling expired at the end of July and Congress now have to raise the government’s loan limit or pause one time again.
Looking at the S&P 500, in in Specifically, Cramer said Williams sees amplitude decrease when calculating the number of advancing actions against declining stocks. This is in in addition to a difficult seasonal period for the broad stock index, that is up 16.8% year until today, Cramer said.
To progress/decline volume in the S&P 500 based on technical analysis by Larry Williams.
“Only from the beginning of the summer, [Williams] can indicate three moments in which the S&P gathered at higher high but the Advance / Decline line failed do a higher read, meaning the market left up on amplitude not so hot, “explained Cramer.
“For Williams, this suggests a lot of big money the manager they have to sell many of their positions. He says he has seen this pattern before and it is not healthy. Normally when stocks go up, the Advance / Decline line should do new tall. But this is not happening and this is what it means move he might have feet of clay, “Cramer said, revealing that Williams took a”small”short position in the E-mini S&P 500 futures.
The technician also sees bearish signals in a momentum indicator known as on-balance volume, which is calculated by adding the S&P 500 volume on good days and subtracting it from bad days, Cramer said.
Recent on-balance the volume for the S&P 500, based on technical analysis by Larry Williams.
“The S&P does new high, but the On Balance Volume remains flat. This is another negative. To remember, for technicians, the volume is like a lie detector. When it is weak, it means that a move it is deceptive. One more reason Williams is worried about the rest of this seasonally busy month, ”Cramer said.
The seasonal trading template for gold around the month of August, base on technical analysis by Larry Williams.
On the other hand, Cramer said Williams’ analysis shows a more optimistic quasiterm perspective for gold. “Williams is long gold for exactly the same reason is concerned about the S&P: the seasonal model, “Cramer said.
In addition, Cramer said the data from the Commodity Futures Trading Commission shows commercial hedgers have recently bought gold futures in a robust fashion, which historically led to “a nice rally”.
The value of gold in the comparison with Treasury bills is another piece of information Working in favor of the precious metal, based on Williams’ analysis, Cramer said.
Graphs from technician analyst Larry Williams looking at the valuation of gold versus Treasury bills.
“As you can see from the graph, not only does the precious metal have a powerful seasonal trend on his side … but it’s hugely undervalued relative to bonds, “Cramer said.
Read More About Business News around the World here!