Update; Market Update

HUI has clearly broken down from the bear flag.  As noted previously, these breakdowns usually see a decline below the start point, which was around 216.

hui

Today’s yield spread activity is quite unfavorable for gold, as was yesterday’s, as noted at the website.

10.2.yields

The S&P 500 made a test of the breakdown resistance today, so I added the SPXS fund as noted in an update yesterday.  I am closely watching the ‘bounce play’ holdings I have.  They will be sold above the ‘mental stop’ levels if I feel the market is rolling over.

spx

Bottom Line

The gold sector is becoming ‘anti’ the stock market again.  That may end up being a positive one day.  But for now, this flag break is probably only just now being recognized by the majority.  Caution on the short term.

The stock market is suspect until/unless it gets above breakdown resistance levels, an example of which is the SPX chart above.  The exception seems to be certain hot commodity speculations, which I am not qualified to chase around.

[edit]  Based on input from a subscriber about this statement in blue above, questioning its logic… my response:

“That was some poor wording on my part based on what I thought was a still-bouncing market while writing the update.”

Another more probable alternative is that the precious metals are leading the bigger market.  I apologize for any confusion.  The bottom line remains the same; nothing looks particularly good and people should consider being in cash… or have been shorting the bounce as they see fit and as their experience and risk tolerance dictate.