FIVE REASONS STOCKS ARE BEING BOUGHT AND GOLD SOLD DESPITE TERROR NEWS $YM_F $SPY $QQQ $IWM $GC_F $GLD $SLV $GDX $NUGT $DUST

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FIVE REASONS STOCKS ARE BEING BOUGHT AND GOLD SOLD DESPITE TERROR NEWS $YM_F $SPY $QQQ $IWM $GC_F $GLD $SLV $GDX $NUGT $DUST

(Please scroll down for annotated charts for insights.)

On Monday, there was news of terror and assassination. To most investors, it would have been logical for stocks to fall and gold to go up. Instead stocks went up and gold fell. Why did this happen?

The five

Here are the five real reasons that explain what is happening.

  • Taxes are likely to be lower in 2017. There is no point in selling now.
  • Money managers are in the mode of performance chase, willing to buy even the tiniest dip.
  • Mom and pop are getting excited about Dow 20,000 and sending money to their favorite mutual funds.
  • This is historically a period of strong seasonality.
  • Liquidity has dropped making it easier for trading desks to push the market higher.

Now let’s look at charts of stocks and gold.

The Dow

The annotated chart linked below is of the DJIA futures. The reason I am using a futures chart instead of charts of popular ETFs such as S&P 500 ETF SPY, Nasdaq 100 ETF QQQ, or Russell 2000 ETF IWM, is that the futures are more sensitive to the news and often move before ETFs move.

Please click here for annotated chart of DJIA futures.

Please click here for annotated chart showing the start of the performance chase.

Please click here for a short-term annotated chart of gold.

Please click here for annotated monthly gold chart.

The chart shows the timing of the news and how the “volume upside/downside” (VUD) indicator behaved. The VUD indicator is an extremely sensitive measure of the true buying demand in real time. VUD stayed green throughout indicating that the true demand to buy did not wane on the bad news even when prices dipped. VUD is derived from tick data…Read more at MarketWatch

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