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This week we have featured the 23-month moving average or 2-year business cycle and its significance to the indices.
Particularly when speaking about the S&P 500, we wrote:
There was a bullish run in 2021 based on easy money. Inflation ran hotter than most expected. The Central banks were caught off guard…, and by 2022..party was over.
So, that begs the question of why this year’s 23-month moving average is one of the most important indicators for equities?
Now, what about gold?
Anybody who has followed us knows how bullish we are in the metal. And, after hearing the State of the Union Address Tuesday night, we are even more bullish now.
Those thoughts will be published over the weekend as an addendum to the 2023 Outlook. Let’s look at the monthly chart of gold.
The charts of the SPY and the Russell 2000 (IWM) both showed how they stopped rallying right under the 23-month MA.
That could change, of course. Gold, on the other hand, is above the 23-month MA and the 2-year business cycle. It cleared the major moving average in December.
Saw a follow-through in January 2023. And thus far, in February, it is holding the gains. In fact, should gold get closer to around 168-170, that would look like a low-risk buy opportunity.
If SPY and IWM cannot clear their 2-year cycles, gold already has watched the charts. They tell you everything.
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