Update; Market Review

There is a problem with biiwii.com’s server this morning and I was unable to do the Wednesday morning Key ETF update without constant interruptions. In its place this week we’ll simply go with a general update by email.

Precious Metals [see edit at end]

Gold did not quite drop to the preferred support zone, before reversing some of its losses yesterday. The candle on GLD is a hammer, which is a bullish reversal candle.

Of note was silver, which held its weekly chart support zone and trend line from last summer. SLV was positive on the day.

What was even more important was the strong showing by the gold miners on a day that gold was down. Could they have been getting caught up in the cheer of the stock market’s recovery rally? I doubt it, but I suppose it is possible. But typically this sort of thing is a precursor to smart money interests front running an eventual bottom in gold. It looked like accumulation.

HUI, along with GDX and GDXJ made lower lows to the beginning points of their bear flags. That was the minimum downside we wanted to see to satisfy the flags. Gold stocks are not out of the woods yet, but yesterday held some positives.

As noted, whether or not the correction ended yesterday, we are going to remain constructive on the weekly charts and their bigger picture potential bottoming situations until negated. A drop by HUI below 210 would start the negation process. I added a few items back yesterday; the quality likes of RGLD and SLW along with a couple miners/explorers and the CEF gold/silver fund selling at a 6% discount to NAV. I’d like to think holdings will be increased going forward, but if yesterday proves just a wiggle within a continuing bearish backdrop, these items will be sold quickly.

Commodities

Crude oil got bashed down to support.

Copper looks sneaky bullish on the short term. It’s big picture charts remain bearish.

The Ag’s continue to be strong, with Coffee jamming up to new recovery highs and our little CORN trade doing what it was supposed to do (for a day at least) and bouncing from the trend line. Sugar (SGG) has a sneaky bullish look to it now as well.

The Uranium ETF (URA) bounced a the 200 day MA’s but still within its consolidation flag and below the 50 MA’s. I am keeping an eye on this one, and also URG, my pet ‘U’ stock.

Stock Markets

NDX 3600 anyone? Yesterday it hit 3596 so we’ll call the bounce target projection satisfied.

The problem with these bounces for bears is that they call into question the bear case. What the bears have going for them is weekly MACDs that are turned down nearly across the board. The plucky Semiconductors being a notable exception.

If you’re bearish, this bounce is a point to back that up with action (using mental or actual stop losses), whereas last week was a time to cover and prepare for the bounce.

Global markets are mixed, with the EM’s looking like they are toppy by daily charts yet on weekly charts the MACDs are triggered up (unlike the US).

Europe is relatively okay and feature PIIGS Italy and Spain still driving higher toward our measured targets. I could not be less interested in these items other than for their value as a speculation indicator on European markets. In other words, all that fear from the Euro crisis is being closed out. That will not be bullish at some point.

Bottom Line

The precious metals are counter cyclical and may be showing signs of bottoming. But a lot of this depends on how long the speculative party in US and global markets is to last. The US has fully closed out the fear and agony of 2008/2009 and is a candidate to top out (into a counter cyclical environment), but this could still take time. Europe is working on closing out its hype filled disaster from 2010/2011.

Commodities are a mixed bag of plays either forecasting inflation (less likely) or getting in on the speculative party with the broad markets (more likely, in my opinion).

It is an atmosphere like a table top with a bunch of spinning tops on it. There is a lot of activity and a lot of motion, and in my opinion clear direction has not yet emerged. In other words, the environment is disorderly and will need to be managed nimbly for the short term.

We’ll continue to do that.

PS: The site appears to be working now. This update will be posted there as well using this week’s password. Keep an eye on the site for public posts that may dove tail with and color what we cover in NFTRH and interim updates.

[edit] 

I have now heard from two people that the gold miners were looked upon favorably by Goldman yesterday.

I do not rate this a positive in the short term and indeed, it heightens the caution level for the short term. If that played into the miners up / gold down situation yesterday its effects could be fleeting.

Hence, we’ll continue to follow the weekly charts as the primary guide to either confirm a bottoming process (that could drag on) or negate it into more bearish possibilities.

I was traveling yesterday so my market interaction was choppy. I did not catch this Goldman news.