Homegrown Indicator
Here’s an indicator that I came up with many years ago and keep an eye on from time to time. I noticed today that it put out a new signal. What it does is compares the trend in silver to the trend in PM stocks. When they diverge, it almost always means we are in for a large move in the PM’s/PM stock market. Best as I can tell, it doesn’t forecast whether the move will be up or down, just a big move in one direction. Here’s the chart:
Anytime the correlation indicator touches or crosses zero, it triggers the signal. Below is a chart of GDX and silver that shows their trends decoupling:
Normally the trends follow along together very well, but you can see they begin to diverge in the second week of March. Bottom line is that it appears a very large move is coming up soon.
By the way, if anyone can glean any further information from this chart (especially the direction of the upcoming move) please post in the comments. Thanks!
I am not able to glean anything from your charts but I will take your analysis as confirming what I conveyed on Friday. I felt that based on trading action and the charts, that if a big move in silver was going to start this week, it needed to begin with that reversal I called for at the bottom Friday morning. We got the reversal and some follow thru on Friday but nothing to guarantee that we would have a big move this week. Your signal gives me hope that we will get the follow thru that I was looking for. Will be watching closely. Thanks for the info about your ratio and it’s track record.