The Key ETF daily charts remain on the same signals as the last update. Precious metals are neutral, US and Euro stock markets are bullish but over bought and commodities and emerging markets are neutral but in potential breakdown mode.
We are in a typical pre-FOMC meat grinder where the precious metals are concerned. I wanted to pass along a few pictures of the current situation, beginning with the important silver-gold ratio (SGR) and HUI-Gold ratio (HGR).
SGR has consolidated the entire post summer correction and remains within the moving average decision point. In fact, the ratio is up a teeny on a bearish day for the sector. Meanwhile, the HGR was due to cool off after a long stretch upward. Warnings would come on each of these ratios with a loss of the moving averages. But so far the sector is still a ‘neutral’ with silver’s relation to gold looking constructive.
Another divergence to today’s bearishness could be the still buoyant TYX-FVX yield spread, which is also positive today. Gold tends to favor an environment where long-term yields rise in relation to shorter term yields.
Daily HUI shows what is thus far a normal fade, but I would like to see the 50 day MA’s hold (blue solid & dotted lines). We cannot rule out a further decline to fill the gap at around 220, unfortunately. This would still keep a higher low intact.
Yet the weekly view has all of its ducks in a row, including a STO (which I don’t usually use) that has gone above 20. The dotted trend line break adds to the reasoning that I’d like to see the 235-240 area hold as support.
It appears that yesterday’s bullish action lathered up the ‘Bugs’ a bit. Today is punishment for that. I rarely trust bullish or bearish activity immediately pre-FOMC.
Precious metals are in the same general status, grinding out a potential bottom with the emphasis on “grinding”.