A snapshot of the current technical status of several key markets (a lot of charts today because macro changes seem to be in effect)…
GLD broke down from the Sym-Tri (strike 1), lost the June low (strike 2) and now would try to find support at the December low, equiv. to gold 1180. Over sold, prone to bounce but technically bearish below 120 and 123.
SLV is broken below 18. Over sold, prone to bounce and bearish. The area just below 18 looks like a short. That is the current state of SLV.
SLV-GLD provides a view of something deflationary, not inflationary. That will be a theme in this update as we move into commodities. The gold-silver ratio is rising along with the USD, and that means something for macro analysis.
GDX must arrest the decline now or it is going to make a lower low to go with the lower high during the Ukraine hype phase. It and HUI have already dropped below the key ‘205 support’ level, but have not closed that way for the week. Over sold, prone to bounce and technically bearish until/unless any such bounce gets above 23.50 and then 24.50 and 26 and so on…
GDXJ is in a little better version of the same boat.
SIL is over sold making a lower low to go with the lower high and just a mess. Ref. SLV-GLD ratio above. The macro message is a negative one spanning many markets.
GDX-GLD is still in a series of higher highs and higher lows. It is also over sold after filling the gap that we had noted a couple of weeks ago. I can’t remember if it was in an update or a report, but the commentary was along the lines that some people don’t take gaps seriously, especially in ratios. But we will take it seriously. Well, there it is.
Now everything is bearish in the precious metals, we get it. But a leading indicator remains in a bullish series of higher highs and higher lows from December. That is a fact and when it stops being a fact we will note it. Again, my job is to note what I see, not jump on the hysteria of the moment. We were aware of the downside and the gap, it is here and the GDX-GLD (HUI-Gold) ratio is intact.
DBC is broken right along with the CCI index, which made a weekly close below long-term support at 500. Over sold and bounces to be evaluated as short opportunities. Bearish.
PALL continues to drop, losing initial support levels. With the lower lows to August and especially June, a negative trend is getting going. Palladium is now declining vs. gold, and we will continue to watch that ratio as an economic indicator (Palladium-Gold was an indicator of coming economic strength in early 2013). It is not yet broken down, but given the negativity coming into play we’ll keep it on radar.
DBB never quite made it to the NFTRH+ target of 18.50 (off the bottoming pattern) before double topping. Yesterday it lost short-term support. Bearish.
COPX is brutal. Hands off copper and copper related. The industrial metals are obviously getting hammered by a ‘China slowdown’ backdrop.
DBA remains in its bearish downtrend channel.
USO remains bearish.
UNG is still going sideways. Neutral to bearish.
URA remains bearish even as Uranium has bounced.
REMX is a disaster. The REE story is tied to China and it doesn’t seem to care about how cool the new iPhone 6 is. Deeply over sold and prone to bounce.
LIT broke down over the last few days. You know, a number of formerly hyped metals and minerals that are positively correlated to the global economy are breaking down. Some of them, as with silver, are starting to break down vs. gold. These are economic signals folks.
TLT either broke down or it did not, depending on the trend line used. We’ll know soon.
TIP-TLT says all it has to say.
SPY is okay above support, but momentum indicators are not good at all.
QQQ is similar.
SMH has the bad momentum as well but needs to lose 50.50 to get bearish.
EZU continues to be in breakdown mode.
EWP (our resident PIIGS member) is also bearish below its trend line.
EEM is bearish as noted several times over the last couple of weeks. This is a short-term breakdown, but other factors are a decline from long-term trend line and under performance to SPY.
FXI is breaking down from short-term support as well.
DXJ and EWJ show how important it is to consider currency movements in considering some ETFs. EWJ eats up all a would-be speculator’s gains and then some due to Japan’s market move being a mirror of its devaluing currency.
FXE is very over sold, prone to bounce and bearish.
UUP is very over bought, can find resistance and is bullish.
Bottom Line
Precious Metals: Bearish, with gold starting to out perform silver. This is a macro indicator that we should be very interested in. The sector is very over sold with deplorable sentiment. It can bounce, but technical damage abounds.
Commodities: You noticed that the commodity portion of this update bulked up this week and that is because a growing deflationary drag is starting to pull down commodities of all kinds. From a macro economic standpoint, commodities tend to be positively correlated to economies. This is a negative signal for stocks markets, you would think…
Stock Markets: Emerging and now the China 25 are looking bearish. ‘China slowdown’ is in the news. Europe ETF’s look worse than Europe markets (as with Japan’s EWJ) due to currency moves. The US markets have some negative leadership and participation signals, but generally remain above key support levels.
Overall: A bearish and deflationary case seems to be developing on the macro. Cash is a position because opportunity, whether long or short, requires cash. How much more percentage does the US market have in its near-term upside? Risk vs. reward continues to mount against stock markets.
The bout of deflation is being led by the precious metals, of which gold is the counter cyclical one and favored over silver. But gold’s nominal price has not finished going down. What is actually very notable is how one commodity after another, headliners to outliers, seems to be going bearish and are starting to under perform even the lowly gold. That is a counter cyclical indicator.
Final Thought: I just noticed that gold is bouncing hard. When I began this extensive update, it was not far above even. Let’s watch gold’s progress both nominally and in relation to other assets. It may have been blown up technically, but gold remains probably our most important macro gauging asset.
