Market Improving; Gold Weakens Relative to Stocks

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January 19, 2012 -- "At its beginning in 1966, Medicare cost $3 billion. The House Ways and Means Committee along with President Johnson estimated that Medicare would cost an estimated $12 billion by 1990. In 1990 Medicare topped $107 billion. That's nine times Congress's prediction. Today's Medicare tab comes to $523 billion, and shows no signs of leveling off. The 2009 Medicare trustees report puts the unfunded Medicare liability at $89 trillion." --Walter Williams, Columnist, Courtesy of James Cook.

The character of the market is improving. Volume on Friday's buying was the strongest of the year with upside volume being 85% of total upside plus downside volume. The negative spread between Lowry's downside and upside volume contracted from 190 last Friday to 169 yesterday, a huge improvement.

After years of outperforming stocks, gold is now weakening on a relative strength compared with stocks. The chart below shows the ratio of stocks to gold. After plunging in July in favor of gold, the ratio has been surging higher in favor of stocks over gold.

dia gld 19 jan 2012

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About Richard Russell