The 2020 to 2060 zone has been noted as a logical area for active bears to begin shorting. SPX closed at 2033 yesterday. But people should refuse the bear Kool-Aid to the extent of knowing that the ‘W’ pattern measures a target to 2100 or a bit higher. Markets are down in ‘pre’ today and I am going to try to keep an eye on the character of things. Who wins, ample resistance or the pattern’s measurement?
Euro STOXX is in a pattern that just sneaked above the 50 day averages. It is neutral at best, lamely bouncing within its downtrend at worst.
Toronto is slightly better and seems to be aping the US and Canadian Energy sectors. Right at the MA 50’s, TSX needs to find support here to remain short-term constructive.
CRB index is still in a short-term uptrend from August. I would like to see it hold here at the SMA 50 and Bollinger Band mid point (MA 20). But there is a gap from early October that could fill in the low 190’s.
The Crude Oil fund filled its similar gap and I want to see this find support now or critical support at 14.21 comes into play again. I would rather not see this support tested again if I am an oil bull.
Gold has taken a bit of a hit right from the logical point for it to have done so, at around the SMA 200 and the key resistance point in the 1180’s we have noted. The sector needed to get spooked but so far at least, this is just a reaction. I would like to see 1140 to 1150 hold or we would start calling any pullback, if it continues, ‘abnormal’.
Silver got too peppy and the expected reaction – very slight though it is thus far – has come from the SMA 200. While neither silver nor gold need to suffer more than what happened on Friday and Monday, any resumed selling needs to see 15.50 or 15.25 hold to keep a pullback ‘normal’.
We have been expecting a bounce target in the 150’s, preferably after a negative reaction. The last 2 trading days dropped Huey from 140 to 128. That is a minor reaction. Considering that former resistance turned tentative support at 133 was lost yesterday we should realize that HUI can drop to the 115-120 area and still remain ‘normal’. That would be healthy for the sector. Alternatively, Friday and Monday would have been a quick shake out. Just giving parameters and not trying to guess.
Gold-Silver Ratio (GSR) has been bouncing, in line with pressure on precious metals and commodities.
Points to consider on the GSR…
- It is not surprising that GSR is bouncing while USD makes a small bounce. These two are running together as they often do. They would be the takers of market liquidity.
- GSR is not yet bullish, it is just bouncing. The same goes for USD. If these both do go bullish, many markets should get pressured. If they resume their bearishness, markets would have a stable underpinning, especially commodities and precious metals.
- The long-term trend in gold vs. silver is up, and therefore even if silver resumes out performing gold we are only indicated to be on a ‘bounce’ in inflationary assets; not a big new bull phase.
- We are also expecting a significant top in gold vs. silver out on the multi-month horizon somewhere. But as of now, silver is in lock down vs. gold and ample market liquidity is not indicated.
