NFTRH Update 5.10.13, Morning Notes

With the precious metals getting smashed in pre-US open (are we really surprised?) the lame counter-bear trend rally appears kaput.  Thus, the weekly chart takes over, and this should have been the primary guide for most people as already noted.

I have personally lost some money trying to give the gold stock sector the benefit of the doubt for a counter trend bounce but whatever is hitting the metals in pre-market has brought the bigger trend back into play sooner than those of us taking a shot on a trade might have hoped.  That’s the markets.

hui
HUI weekly

Above is the updated weekly chart from NFTRH 237.  We noted a potential bear flag and if today ends up being what the pre-market implies, then it would go from a potential to an actual bear flag.  The next target would be in the low 200’s in that case.  Gold and silver remain in bear markets as long as they remain below 1524 and 26.10 respectively.

Here I want to highlight the plan that was alluded to in a previous update.  The broad markets are expected to blow off to the upside at or about the targets we have noted on some of the leaders (we’ll update these again in NFTRH 238).  If sentiment jerks to critically over bullish (it is on the way) in the ‘sell in May (or June)’ window and these blow off targets are achieved the play appears to be to sell, avoid or get short the general stock market.  Critically over bullish sentiment would be a key.

Within this, we noted that the precious metals could take a ‘next leg down’ as implied by what could be interpreted as weekly bear flags in gold, silver and especially the miners.  If the broad market tops out and declines and if the precious metals are leading that decline or declining in sympathy, whatever bottom they achieve in the coming weeks could be the one to be bought for a new cyclical bull market.

The targets are HUI low 200’s (with a weary eye on the less likely 100, which is the target off of the big topping pattern), 1250 (and 1150 and sub-1000) on gold, and sub-20 on silver.

If the Above Analysis is Wrong?

Then it is a new, enduring stock market bubble born of policy, Bernanke wins, there is no inflation and honest money continues its bear market.  This is not my expectation, but it is what we are being told to believe right now.

The correct stance continues to be stay intact first and ready for opportunity second in my opinion.