It’s always worth watching measures of risk appetite when evaluating equities, and one such gauge recently perked up: the ratio of lumber to gold. That could suggest more upside in stocks more broadly, according to All Star Charts Institutional’s Top 10 Charts of the Week.
“In past versions of this report, we’ve spoken about the Lumber/Gold ratio and why it’s an important Intermarket signal that we’re watching, particularly due to its swift decline over the last year or so,” All Star Charts wrote in a client note. “Monday evening we outlined on the blog why we thought the bias was shifting to the upside in Lumber on an absolute basis and yesterday we got immediate upside follow-through. A failed breakdown and bullish momentum divergence have allowed us to define our risk on the long side against 300, with an upside objective near 435. Not only is this a trade idea we like, but from an intermarket perspective, it’s constructive to see what has been a major headwind for US Equities begin to find its footing and attempt to move higher.”
Read the full Top 10 Charts of the Week here. For information about how to subscribe and receive the charts Wednesday, two days before before they are published on IPO Edge, contact All Start Charts Institutional Sales.