Well, I think the red headed step child has been beaten enough, don’t you? Pardon the insensitive old fashioned expression, but the point is that the precious metals have been clobbered as the stock market has experienced increasing bullishness in price, momentum and sentiment. All with 2 months left in the Q4 window that I’d anticipated a change (i.e. top in the market, which looks like it is blowing off, and a final bottom in the gold sector, which is often seasonally weak into December). *
HUI has dropped to its most oversold level of 2017 (by RSI). The sector is trying to firm today and may well be brewing a bounce. The 195-200 area was broken support and 195 now begins the resistance zone, if a bounce materializes. If a bounce does not materialize from today’s low I’d watch the 178-182 range. Remember that each of 2017’s hard down phases have been mere blips on the monthly chart, which is still intact to a coming bullish scenario.
But the sector has not had a classic volume puke that would signal capitulation, and so a bounce is just a bounce if it does get started. I’m still holding miner positions, but have taken the profits on the hedges (JDST). I am still long USD (via UUP), so that is an indirect hedge.
We might anticipate a bounce to or toward the resistance area but other aspects of the macro will have to be in line in order to get bullish for anything more. As it stands now, it is still not a bullish macro backdrop for the sector. But since this is the sector in waiting, I am very interested in it going forward.
We’ll of course review the sector along with everything else this weekend.
* It’s not to say the Q4 window is written in stone, but I’ve caught this market trying to get me to believe the projection will be wrong; but a lot can happen in 2 months.
