First of all, we must remember that when it comes to markets, there are festive celebrations in many countries. Among the countries with celebrations are the United Kingdom, Germany, Switzerland, Italy, Spain, France, Portugal, Australia, Hong Kong, New Zealand and South Africa.
Ratios with Fundamentals for Investors
We all know that gold is a very attractive investment in times of uncertainty, fear, economic crisis, high inflation, etc.
This is why I commented on gold on January 12th as a good investment strategy for this year. It opened trading at 1,879.70 that day and has since risen to $2,027.70. Interesting climb.
But with gold, there’s a series of interesting ratios. I will explain it below:
gold ratio /
It shows how many ounces of silver are needed to buy one ounce of gold. Example: If the price of an ounce of gold is $1,000 and an ounce of silver is $20, the ratio is 50.
In moments of uncertainty, investors choose to buy gold, so the ratio goes up.
HUI indicator
Also known as the Bugs Amex Gold Index, it is an index of companies involved in gold mining, whose coverage of gold production is limited to periods of 18 months or less.
It is valid for predicting gold trends.
gold ratio /
gold/copper
If we divide the price of copper by the price of gold, we will have a view of the economic outlook for the market.
The idea is that if this low ratio means that investors are buying more gold than copper, they are not expecting anything new from the economy. On the other hand, if the ratio goes up, it implies that investors do not see storm clouds and they are optimistic about future prospects.
Gold / oil ratio
It is a ratio that measures the number of barrels of oil that can be bought with one ounce of gold. The average ratio from April 1970 to April 2005 was 15.7 barrels of oil to one ounce of gold.
The ranking of the main global stock market indices so far this year is as follows:
– Nasdaq +15.49%
– + 13.60٪
– French cocoa + 13.15%
– German + 12.02%
– + 6.92٪
– Chinese CSI + 5.81%
– Japanese + 5.28%
– 27 UK +3.89%
– + 1.02٪
It is worth highlighting the Chinese Star 50 index, a big tech heavyweight, which is up +19% this year, outperforming the CSI 300 which is up +5.8%, which is up +2%. There are expectations that demand for chips will drop soon while the growing interest in artificial intelligence has helped boost sentiment and confidence.
Investor Sentiment (AAII)
Bullish sentiment, that is, expectations that share prices will rise in the next six months, rose 1.6 percentage points to 22.5%. Despite this, it is still below the historical average of 37.5%.
Bearish sentiment, which means expectations that stock prices will decline in the next six months, fell 2.8 percentage points to 45.6%, still above its historical average of 31%.
April magic
We already entered April, which is the second best month for stocks if we take the last 72 years (average return is +1.5%), and it was only surpassed in November with average return +1.7% but if we go back to the last 20 years, it’s even better. Month. And if we also talk about the pre-election year, as it is currently the case, we must remember that it rose 17 out of 18 times over the past 72 years, only falling back in 1987 and it was -1.2%.
For the Dow Jones, April is the best month of the year for the past 72 years.
If we refer to the NASDAQ, then April is the fourth best month of the year in the same period.
It’s also fair to say that April of last year was very negative with the S&P 500 dropping -8.8%, the worst decline in 52 years, due to the Russian war in Ukraine, high inflation, fears of a recession and higher interest rates from before the Federal Reserve.
This month is interesting, aside from these stats, because it is a month in which listed companies report first-quarter results.
Of course, this time the market is expecting the S&P 500 companies to post a -6.6% drop in Q1 earnings. If that happens, it would be the biggest drop in earnings since it plunged nearly -32% in the second quarter of 2020 due to the coronavirus pandemic.
interesting pattern
There is an interesting pattern. It turns out that when the S&P 500 doesn’t close below its December low in the first quarter, the index performs well for the rest of the year.
In the past 72 years, the S&P 500 has stayed above its December lows 36 times, and it turns out that of the 36 times, 34 times the index has risen by +18.5%.
Of course this is statistical evidence, and therefore not a prediction, and past performance should not guarantee future performance, but history often repeats itself.
Free of charge, the financial analyst, Muhammad Ghabari, provides you with glimpses of the best methods of technical analysis, its most famous models, and how to read charts, in a free seminar (Webinar) on April 13 at 10:00 pm Riyadh time. All you have to do is Register from here
Free webinar
