The US stock market and precious metals are the areas of interest because without one cracking, the other does not step forward. While we have defined an uptrend (as opposed to a bounce) as needing to see HUI, GDX, GDXJ, etc. climb above the February highs, the other side of the coin is that confidence needs to crack in stock markets, especially US stock markets.
I give you the leader, the Semiconductors, breaking below the 50 day moving average. The warning (against over enthusiastic bearishness) is that SOX has done this twice before on this rally alone and then regained its massively bullish composure. If the bottom channel line cracks, that could really get bearishness going, however.
Another leader, the Russell 2000 continues to look bearish below the SMA 50.
While SPX is denting the SMA 50 again in a bearish move. The SMA 50 held as support once, keeping open the consolidation/mini correction view. But a new drop below (if this holds; it is in-day after all) and especially a drop below the March low, brings on significant bearish potential.
All of which would be positive for the gold sector, which we have long noted is counter cyclical and in its best investment case, in need of a weak stock market. I took a loss on my DUST position and have even added a couple positions (AAU increased, bought back GSV), but technically am still waiting for the February high as the decision point for a real bull leg.
Huey’s got a way to go to the 220s, where it would face its decision point. But along the way, if the US stock market continues to weaken, we would be adding fundamentals to the technicals and building the story.
So I’ll clip it here at this quick snapshot. But if Thing 1 (stock market weakness) remains in play, then Thing 2 (a constructive fundamental view of the gold sector) would get a boost. Let’s see how it plays out.