A snapshot of daily technicals on key ETFs…
GLD is in a series of lower lows and lower highs. It failed to rise above the June low, and so remains bearish until it can at least clear 120 and then later, make a higher high to July.
SLV is the same way but much weaker in not having gotten anywhere near the May/June low. A start – and I mean the bare minimum to a bounce – would be dealing with the blue trend line.
GDX has gone nowhere despite gold’s tepid rise. Is it double or ‘W’ bottoming? Could be, but the burden of proof lies with GDX.
SIL is the same.
Fundamentally, the sector has sagged again with the 10yr-2yr yield spread.
While gold vs. the US stock market is dropping hard after a burst upward. Both of these show confidence being regained in policy making and the risk ‘ON’ trade. That has been bad for gold on this inflation cycle.
SLV vs. GLD is severely broken down (as the gold-silver ratio has broken up), but relief in precious metals, commodities and any would-be inflation bounce would be signaled by this ratio, which shows RSI rising from a deeply over sold level opposite to its over bought in the summer.
DBC can bounce, but is broken down and bearish on the bigger picture per the chart’s note.
DBB continues to hold below resistance but has an interesting MACD. It never did quite reach the NFTRH+ target of 18.50 on the first rise out of the January-June pattern.
DBA could be interesting here. At this point is just a potential pattern but if DBA gets above the moving averages at 26 we might start to firm an Inverted H&S similar to what DBB did in Jan-June.
USO has a lot of resistance. If a bounce is to play out, getting above 31 is objective 1. Then 33 and the SMA 50.
URA became so deeply over sold that it is notable for its bounce potential. MACD and RSI are constructive.
Once again we note that the price of Uranium Oxide has bounced (within the context of a severe bear market).
TLT has been dropping ever since the Wizard got everybody to stop looking behind the curtain. As the market re-finds risk ‘ON’, TLT gets back under control.
TIP-TLT is taking the same shape as some commodity and global markets (EEM, FXI) that might benefit from a rise in the inflation expectations gauge.
SPY… move along, nothing to see here.
Trends were broken and trends are being taken back. That is a reality. The ‘V’ bounce is so far painted as just another hype filled drop and confidence fueled recovery (with the ingenious ploy of putting a supposed Fed hawk out front talking QE extension).
My eyes tell me SPY is repaired, if for a day. My gut tells me that it is not out of the woods. Let’s see how it closes the week.
QQQ is above 99, which we had noted was “a door to things bears would not want to see”. Door opened. So now bears (incl. my short on this ETF) are playing the ‘maybe it will stop at the broken trend line’ game.
SMH is a leader. Semi’s led the breakdown with the sector hype a couple weeks ago and it bottomed right at big picture support as expected (where I played the bounce).
IWM did stab to and through the zone we had identified as a possibility if the bounce got impulsive. There is a topping pattern in play with its high being July. The red dotted line shows where a new high could neuter that pattern. As of now, IWM has made a lower high and a lower low despite the powerful bounce.
EZU is bouncing toward a potential re-short point.
EWP is bouncing toward a potential re-short point.
EEM is forming what looks like a bounce pattern above support.
FXI found support a bit higher than I thought it would. Yesterday brought the pattern to a new bounce high. At 40 resistance starts coming into play.
FXE is bouncing, but 127.50 is a key beyond a bounce.
UUP is in a not so inspiring (read: toppy) short-term pattern. What is FOMC going to attempt to do to the USD today at 2:00 US Eastern Time? We know that the moment the stock market took a decent little correction Bullard came out talking about anti-USD QE extension. We also know that various Fed talking heads started eating microphones to talk down the currency when USD broke above former resistance (now support at 85).
FXA, a ‘commodity currency’, while remaining bearish on the big picture, is putting on an interesting little pattern. A bounce in Aussie would be constructive for commodities and potentially, precious metals. Canada dollar (the other commodity currency) is similar, although not breaking above resistance as clearly as FXA is trying to do.
FXY has dropped with all the other risk ‘OFF’ items on the recovery. Support is noted.
Bottom Line
Precious Metals: Gold got a risk ‘OFF’ bid and then sagged with the asset market rally that found its bottom with Bullard’s inflationary jawboning. How ironic these times. Nothing has changed here; precious metals are below key resistance levels and must prove their case technically. Bounces are one thing, but changing trends are quite another.
Commodities: Generally similar to the precious metals. Many of these became more deeply over sold than the PM’s and their bounce patterns look more distinct. But the commodity sector is broken and only a lot of positive technical work (and CCI above 500) would fix that.
Stock Markets: US is on a savage ‘V’ bounce. The technician writing this notes that upside parameters are being violated. The human writing this keeps the words ‘bull trap’ in mind just in case.
Global continues to show a bearish Europe rising to what could be a shorting opportunity (we’ll update actual indexes on the weekend, to back out whatever currency noise may be in the ETFs). Emerging and China 25 are making little short-term bounce patterns.
Currencies: The USD is sagging in line with a host of Fed jawbones and is above key support. The Euro is bouncing and is below key resistance. The Yen is wobbling around after its big risk ‘OFF’ bid. Finally, the commodity currencies are looking bouncy and that could help out the commodity sector, the precious metals (led by silver) and an ‘inflation trade’ bounce potential.
