A snapshot of current daily technicals…
Precious Metals
GLD broke up from the pattern neckline and smashed through the SMA 200. That area around 120 is now key support. Upside target measured off the pattern has been around 128, where it would be very over bought.
SLV is approaching resistance at 18, where it too would be over bought.
SLV-GLD has curiously not led the rally. This might point to some sustainability (beyond some expected turbulence at or around resistance) for the gold sector, unlike what happened in June when SLV-GLD got very over bought during the geopolitical hype of the time. For sustainability, you don’t want silver bugs out front chest thumping. A global economic contraction is better for gold then silver, generally.
GDX channel busted up and hit the measured target yesterday. HUI got to 210 as well, which was its measurement. However, recall that we noted on the weekly chart on page 25 of NFTRH 326 that HUI can rise to the red dotted downtrend channel, which is at around 224. The equivalent for GDX is 24+.
SIL is coming up to resistance at around the SMA 200 off a bullish pattern.
GDX-GLD is healthy and looks like it can go higher.
GLD vs. SPY is not yet in a new uptrend, GLD-DBC is absolutely on an uptrend, GLD-USO highlights an industry that benefits from cheap oil; gold mining.
Precious Metals Bottom Line
Who would’ve thought the gold sector could perform well during a phase of USD strength and global contraction and deflationary fears? Well us, among the few. Our big picture macro view is on track. Meanwhile, we are starting to get over bought here as various items get up into resistance areas. So I again request that each of us know whether we are traders, holders, accumulators or some combination. At some point the ride will get bumpy and negative reactions/corrections will occur.
Commodities
DBC bearish and over sold.
DBA bearish and over sold.
DBB bearish.
USO bearish.
UNG bearish.
URA bearish.
COPX bearish.
Commodities Bottom Line
Bearish, in the absence of any perception of an inflation problem the world over.
Stock Markets
SPY is making a thus far lame attempt to bounce from support. The pattern and MACD are not bullish looking. Indeed, an opportunity from the bearish side could present at around the SMA 50 or 205 +/-. A higher high to the January high would be a handy ‘stop loss’.
QQQ is very similar. A bounce to 103 could be a bear opportunity.
SMH is a leader that is still fine. Watch it to see if it makes a higher high to the January high. If so, maybe caution shorting the main indexes might be advised.
IBB as well is still better than fine. It is making new highs, not over bought and is just plain bullish. It is another of our leaders.
IWM should be watched for clues as well. It is bearish below 117. Above it? Not so much. Indeed, it would quickly flip to bullish based on the larger pattern.
HEDJ in fact has a very similar pattern to IWM and it has broken out. This fund neutralizes the deplorable price action in the Euro.
EWC remains bearish.
FXI is still okay. Recall the weekly and monthly charts we follow in NFTRH. If FXI can hold around the 42 area and start making new highs the technicals say ‘much higher’. That is what they say.
EEM is still dealing with notable resistance in its bounce attempt. A correction in USD would be helpful to the EM’s.
DXJ got back above support. The pattern looks sloppy, however. If it can break the red dotted line, it may start getting bullish.
Stock Markets Bottom Line
We have been discussing a possible scenario in 2015 where some European stocks potentially out perform the US, due to currency devaluation and its effects on trade. That could be happening now. We’ll watch closely going forward. Meanwhile, China inexplicably continues to look constructive and Japan may again become so, depending on the Yen devaluation. US stocks have a couple momentum leaders saying higher but a bunch of other items looking mighty suspect. Caution here for now.
Currency
UUP just keeps going uup. There is a lot going on this week and next that could affect currency markets. Meanwhile, USD is over bought and vulnerable.
FXE just keeps going down, but is subject to the same dynamics in play.
Currency Bottom Line
The Swissy just detached itself from the madness going on in global currencies. That meant something. The macro pivot we have noted for a year now appears to be kicking in and it is centering on public confidence in policy making. What do policy makers do? They make policy that affects the currencies they are supposedly assigned to steward. They are playing a global game of QE-style Whack-a-Mole (i.e. competitively devaluation) and confidence is slowly waning.
