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CNBC: Charts Suggest S&P 500 May Struggle in August While Gold Looks Set to Rally, Cramer Says

August 03, 2021

Article by Kevin Stankiewicz in CNBC financial

Investors may be able to find positive returns in gold while the S&P 500 enters a historically challenging month, CNBC’s Jim Cramer said Monday.

“The charts, as interpreted by the legendary Larry Williams, suggest that August could be a tough month for the S&P 500, but a terrific month for gold. Given the big picture backdrop right now, that wouldn’t surprise me one bit,” the “Mad Money” host said.

“Remember, during the original debt ceiling debacle a decade ago, the stock market broke down and ... gold did great,” Cramer added.

Looking at the S&P 500, in particular, Cramer said Williams sees diminishing breadth when tallying the number of advancing stocks versus declining stocks. This is in addition to a difficult seasonal period for the broad equity index, which is up 16.8% year to date, Cramer said.

Advance/decline volume in the S&P 500 based on technical analysis from Larry Williams.

“For Williams, that suggests lots of big money managers must be selling many of their positions. He says he’s seen this pattern before and it’s not healthy. Normally when stocks rally, the Advance/Decline line should be making new highs. But that’s not happening and it means this move could have feet of clay,” Cramer said.

On the other hand, Cramer said Williams’ analysis shows a more optimistic near-term outlook for gold. “Williams is long gold for precisely the same reason he’s worried about the S&P: The seasonal pattern,” Cramer said.

Additionally, Cramer said data from the Commodity Futures Trading Commission shows commercial hedgers have recently been buying gold futures in a robust fashion, which historically has led to “a nice rally.”

Gold’s value in comparison to Treasury bonds is another ......

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