NFTRH Interim Update 1.3.13

Precious Metals

  • Silver is still below the 31 resistance, although it no longer looks like a Bear Flag.  Still, resistance is resistance until it no longer is.
  • Gold also hit resistance below 1700 and sagged.
  • HUI has been looking constructive (to end its correction) for the last week or two, with bullish divergence by MACD and RSI and its out performance to gold (HUI-Gold ratio).  Let’s look closer…

HUI daily

I wanted to conjure up the events of a year ago that got Huey into the mess that became 2012.  A then ‘potential’ topping pattern was in play from 2011, but HUI began a decent rally at the beginning of the year.  In failing to make a higher high in late February/early March, we were put on notice.  Then when the neckline failed in March/April, all sorts of bearish possibilities opened up.

Continuing our little walk down memory lane, HUI double bottomed in the summer and began a strong rally, breaking back through the neckline.  I thought this to be very significant and bullish.  Then HUI failed below our measured target of 540-550 and when it broke back below the neckline, caution level was raised to high.

So here we are, with Huey now back at the neckline and dealing with its resistance.  We believe we may be free of the continuum of hands-on policy makers and media whipping up a storm around every new crisis, political event or policy decision.  This continuum encompassed the majority of 2012.

Operation Twist is now history and we are watching money supply data.  In short, the track may be more clear from a fundamental perspective now but technically, 460 (ish) remains an obstacle.  Of course HUI was going to hit that area and recoil (as it did yesterday).  It is resistance after all.

A “normal” reaction would bring HUI back to the EMA 20 (now 439 and hooking up) and until it puts the 460 congestion zone behind it, a bottom making process is still in play.  Again, I like the HUI-Gold ratio, the positive MACD divergence and now we can add the RSI that just went green at 50+.

The shorter term indicator, CCI, is over bought and considering all those moving averages and the neckline offering resistance, this is a logical point for a cool down period.  If or when HUI gets through this resistance zone, I am looking for 480 to 500 as the next stop.  But that is all conjecture at this point.  A pullback to around 440 is open and would be normal.  Below that could be uncomfortable for the short-term bullish case.

Broad Markets

I have a feeling that yesterday was all those investment managers keeping all those clients in cash momo’ing the market on relief.  Still, the impulsiveness of it implies follow through, perhaps after a pause to refresh.

NFTRH remains bearish the US markets later in 2013.  But this may not become active until the spring.

NFTRH Model Portfolio themes continue to be global diversification in the emerging, Asian and European markets, commodities, precious metals and global and inflation protected bonds of reasonably high quality.

We should let 2013 unfold a bit before setting anything in stone.  Let’s see what trends become established.  But for the short-term, current holdings in Europe and Emerging Markets have taken out resistance and/or confirmed support and I want to let this horse run a bit; at least as long as the market view remains constructive or until supports are violated.

Bottom Line

Markets – including the precious metals – may be due for a breather.  Also, gold and silver have not yet technically taken out our important upside resistance levels (in the precious metals it’s Gold 1690, Silver 31 and HUI 460).  We will watch parameters to make sure “breather” does not morph into “failure”.

But thus far, the impulsive burst yesterday implies follow through to come.



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