From last night’s update:
With a failure, I’ll try to go net short or simply sidelines. With a breakout, net long. All the while, until the correction is broken to the upside or the sector gets wiped out, I am viewing gold stocks as just another play in the market. A break of the channel would turn the daily trend up, but the upside marker to a confirmed new bull phase is the 26 area and a would-be ‘higher high’.
GDX made the bust out today. It now has its sights set on the SMA 200. I covered the NUGT short and added a few additional longs (SSRI, RGLD & SLW) early enough in the day so as to end up with a nice day, on balance. Now, hopefully I will not get ‘jobbed’ for this tomorrow morning on the payrolls release.
Let me spend a moment here, because momentum and technicals may be trying to tell us something and I don’t want to be caught flat footed. GDX has broken a bear channel that has been in place since July, a half a year. That is notable. Technically, a new bull phase is not in play until a rise above the November highs, but as noted above, the target is the SMA 200 and from there, who knows?
The thrust and conviction in play may imply something more. For now we can manage a target to the SMA 200, with open minds about what comes next. I am expecting Trump mania to unwind into widespread disappointment by spring time, after all. That would be a big fundamental underpinning to the gold sector.
Here is the daily HUI, clearly breaking lateral resistance. That looks like conviction. I want to see a weekly close with this status.
The weekly has put Huey back above the EMA 55, which I would like to see reclaimed in order to begin talking ‘bull’ in a sustainable way.
So, will Payrolls stop this bus? It is hard to see how it would, but let’s get through that data and barring a dramatic reversal, move forward with the expectation that GDX now targets the 25 area and HUI 220.
Moving on, we had an update today showing the breakout and pullback on IYR, which was highlighted as a ‘look-ahead’ at the end of December. Today’s pullback was exactly what I’d look for in order to buy, so I did. It is a similar situation to what happened with the Transports iShares IYT buy opp. a few months ago. IYR tested the SMA 200 and then finished positive.
Per this post I took partial profit on Treasury bond fund TLT, but hold the balance indefinitely. I think it’s got higher to go, but it has bounced hard, right to the SMA 50.
Of the other charts shown last night, AMGN held its breakout, SQM continued upward and JNJ popped up from what I had been hoping was a little bullish flag.
I am trying to stay balanced with cash and a mix of risk ‘on’ stocks and risk ‘off’ items. I am going to continue to treat the gold sector as “just another play in the market”, but I have to admit I have my eye on it now for its potential to eventually work its way to something better than just another play. If risk goes off, all those herds that rushed out of T bonds and gold will rush right back to them. That’s what herds do, they rush.