alice

Post-FOMC; Gold Stocks, Gold and USD

A few items jumping out at me, post-Fed. HUI is moving to its next resistance parameter, which is the declining SMA 200. That was a very valid bounce target. If it gets through there the 3 obstacles left for a new bull trend would be the June, April and February highs.

hui

The weekly sees Huey at the key resistance of the EMA 55 and a lateral cluster.

hui

I don’t want to be the guy calling caution as gold bugs run rampant, but the charts are what they are and they must be presented in order for us all to make informed decisions. For my part, I’ve added KGC, KL.TO (back) and AXU (will be added to the multi-panel charts) this week to go with items already held… along with the still-held DUST (ouch) hedge.

On a positive note, it is now earnings season and NEM has fulfilled what I thought – and recently noted – some miners might start doing, which is to surprise on earnings. See this post from earlier today. This along with the vastly improved CoT and ongoing positive divergence by RGLD, FNV, KGC, KL.TO, IAG and others, checks a box in the plus column.

Here is another. From mrci.com comes a picture of gold’s 40 year seasonal average, which if it holds true, sees a big boost in August. Whether or not the theoretical final spike low is in, the seasonal makes it easier to be a precious metals buyer, especially given the CoT data.

gold seasonal

I hate to be a party pooper, but in seeing all kinds of commodities and anti-USD items ramping up now and seeing this picture of USD making a new low, post Fed, I am brought toward the point of having to admit I was wrong on USD. I am toward that point but ever plucky, am not at that point! Not on FOMC hype and algos’ and robots’ reactions. I am still holding the euro short.

usd

The monthly shows the agonizing picture. The index is ugly but not yet broken.

usd

What’s more, I am actually feeling more bullish on the dollar as I think about it. The sentiment profile was stacked against Uncle Buck before today and I am wondering about exclamation points and the like. As in, could this week mark a low?

Anyway, just letting you know the captain is continuing to go down with his USD ship until it takes on a critical mass of water. There was an article at MarketWatch today citing a strategist at PIMCO talking about why the Trump admin is bad for USD and therefore, bearish. A well placed contrary indicator? They don’t all work, but I want to let it breathe a bit more and see.

A final note on USD. We have shown that a strong dollar has been a negative for the stock market, on a delayed time frame (strong USD in 2014 leads a market correction in 2015) and that the market’s post-Trump rally has gone hand in hand with USD’s bear phase. If the buck breaks, I’d expect continued mini-mania in stocks. If it reverses, I think some pressure would be brought to bear.