Stocks Are Vulnerable Relative to Gold

It's not just the Dow:Gold ratio that looks scary up here. We're seeing see the vulnerability across the board. The S&P500 and Nasdaq100 priced in Gold look to be rolling over here. Momentum has faded and trendlines are breaking.

Today we'll use the ETFs to compare. First take a look at the Dow/Gold ratio ($DIA:$GLD). We have a massive bearish divergence in the Relative Strength Index all year long: Higher highs in price with lower highs in RSI. But more importantly is the brief new high made this week that just couldn't hold. From false moves come really fast ones in the opposite direction. We see it all the time:

Now take a look at the S&P500 priced in Gold ($SPY:$GLD). We have the same bearish divergence in momentum with trendlines breaking:

And finally the Nasdaq100 ($QQQ:$GLD) - We're seeing the exact same thing:

We know that the long-term trend is in Gold outperforming stocks. This isn't a secret to allstarcharts readers. But within these trends come counter-trend rallies. It looks to me like this one has come to an end.

*And the same thing is happening in the Russell2000, Mid-Cap 400, Dow Transports and NYSE Composite

Also See:

Long-term Dow vs Gold Chart (Nov 8, 2011)

Tags: $DJIA $SPX $NDX $ND_F $ES_F $IYJ $GC_F $IWM $MDY $NYA $IYT