One safe spot during this turbulent market has surprisingly been Gold. The chart above shows the SPX/Gold ratio which divides the S&P into the price of gold to show relative strength. Notice that the S&P since mid 2009 has been underperforming gold. This had a significant change at the April market top when stocks fell harder than gold.
The 2nd section of the chart is Gold by itself. You can see the up trend it has been in since late 2008. At the end of July Gold touched this long term trend line and has rallied since. This turnaround could be a signal that the markets are about to resume their underperformance. This also could signal a good hedge play to the shorts that I have suggested in the market. A long gold/short stocks strategy could be a positive way to utilize capital.
Watch that gold up trendline currently at 1115 to know when this trade may come unraveled.
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