Loading ...Nasdaq 100 vs XAU: Two Long Term Cup and Handles
I think I originally shared this chart in December. Updated through today and we see a possible backtest of the Cup and Handle neckline.
Can be interpreted as bearish for the precious metals miners, but keep in mind that individual mining stocks can and do beat the Nasdaq 100. For example, Kirkland Lake has crushed the Nasdaq 100 for the last three years. Metalla Royalty and Streaming is also poised to outperform the Nasdaq 100, as observed on this ratio chart.
But in terms of the miner index XAU, NDX looks like a better bet as long as the ratio maintains above the Cup and Handle neckline from 2000. -Harry
Oh bugger. That would mean that the worst part of the gold and gold stocks bear was yet to come. Having said that the 1990s cup was very small and the 2000s cup included two stock bear markets and a 10 year gold bull.
Another interesting think that I didn’t notice before is how small the 2008 crash in the Nasdaq was compared to the 2000-2002 crash. I knew it was smaller but here it looks tiny.
Yes! Maybe mining is just a tough business and mining stocks as a sector just have a tough time holding their gains over the long term like tech stocks. XAU made a round trip from 50 in 2001 to 50 again in late 2015, after reaching a peak near 225 in 2011. Means we need to work harder to pick the long term winners out of the index, and/or recognize XAU isn’t as good a “buy and hold” sector as QQQ so we need to moderate our greed and force ourselves to take profits.
Good point on the Nasdaq crashes! Cut in half during 2008, but an 80%+ haircut in the 2000-2002 wipeout! Makes the 50% drawdown look tiny.