GLD is bouncing, reclaiming the ‘neckline’ to the bearish pattern (as noted, gold itself already did this). Within the pattern a Triangle is drawn. Big resistance is the 50 MA’s and the nose of this Triangle. Success there makes it neutral. Ultimately, GLD needs to make a higher high (above 130) from the October high and get MACD green to be a bull.
The Small Caps (Russell 2000), which have been market leaders, have led this mini correction. RUT is now nearing a point – by the 50 day moving averages and by RSI – that has limited all previous pullbacks. Watch RUT as a signal to a traditional bullish late December into January or the opposite, a more severe correction. A breakdown from the MA 50’s would break the mechanical trend of the bull of the last year.
The first 5 headlines on a popular gold website I reviewed this morning are either flat out bullish or scouting for a bottom. The gold bug mind is tattered, but alive and intact. Despite this, I think it is time to get serious about the potential for a bottom in the precious metals complex.
Because these stocks were highlighted as potential trades, I want to keep tabs on them for anyone who is interested.
GLD is right at the line that puts some bull potential back in the picture. What I find most interesting is something that was mentioned last week… gold starting to respond in a positive way despite the dreaded ‘taper’ talk. This reinforces our view that the sooner taper begins, the better (still subject to short term negative reactions depending on a majority of traders’ perceptions).
This morning I initiated positions in AAU and TGD to go with the existing KDX.TO. They were essentially flat when bought and I do not plan to chase anything. The…
As if we needed more complications to our decision making, here is the sentiment graphic as of yesterday’s close.
A two in one update. First for traders only, a look at a stock I am adding for a tax loss, January effect type play; BRCM. Folks, I am not trying to turn sensible people into traders so please disregard this in the likely event that it is not for you.
Today could be an important one for the precious metals. The ‘jobs’ report was as strong as could have been expected, precious metals dropped hard on the knee jerk but have bounced back in pre-market. That reversal might mean something.
We have been noting the Canadian dollar along with several other currencies in NFTRH reports. The Aussie had broken down from support but Canada had clung to support despite a bearish looking pattern. This week it is in danger of losing that support.
Along the same lines as the trades in Palladium and the REE’s, another resources sector that is strategic to a positive economic environment is Uranium. The sector has been dead since Fukushima seemed to coincide with the end of the last commodity cycle in early 2011.
A disclaimer: I am long and/or trading several regular ‘bull stocks’ (as well as short a couple). Don’t interpret the sober message below as a ‘sell your stocks right now!’ style bearish warning. Indeed, after an expected choppy start to December I think more bull market mania, errr… rally, could still be ahead. But it would be just dandy if people would keep their perspective along the way.
From the December 1 edition of Notes From the Rabbit Hole (NFTRH 267):
Closing the 2008 ‘Gap’
In 2008 market and economic participants suffered a hard downside ‘gap’ in the prices of their assets and in the levels of their expectations. The bull market that began in March of 2009 is doing a fine job of closing that gap and fully resetting the herd from the utter fear mode of Q4, 2008 to a 2007 or even 1999 style greed mode today.
An update for would-be Tax Loss / ‘January Effect’ buyers…
As you may have noticed in the portfolio section of NFTRH 267, REMX was added for a diversified play on the REE sector. This is as much a tax loss and would-be ‘January effect’ play as anything else. Also, if the economy remains strong (ISM just out at a strong 57.3%) I would expect certain strategic commodities to eventually gain a bid in the first half of 2014.
