It is FOMC day with new Chairman Powell poised to deliver a rate hike and initial press conference (if I were him I’d talk a little hawk to establish a baseline of credibility). So the noise level is up there and in-day indicators could well be just picking up the static.
Regardless, we’ve talked about the cyclical vs. non-cyclical metal indicators as a would-be warning on a cycle turn. To this point we’ve noted that they got bruised but not broken in the February market downturn. Today Industrial Metals (IM/Gold) and Palladium/Gold are poking the 200 day moving averages.
Let’s take a look using ETFs (DBB, PALL and GLD).
IM/Gold was already easing below support but in-day today it is dropping below the 200 day moving average (unlike DBB/GLD, GYX/Gold held the SMA 200 yesterday).
PALL/Gold is dropping below the SMA 200 as well, but unlike Gold/IM has not yet made a lower low.
For reference, here is the weekly view of PALL/GLD that we have reviewed previously. It is resting at the same key moving average that has supported it since the first crack.
And here is DBB/GLD on a weekly view. In dropping and Hammering below the EMA 45, it is not doing anything it did not do twice in 2017 before resuming its rally (and pro-cyclical message).
Consider this a lower priority update due to the macro noise. The ratios are piercing the daily SMA 200 and that is worth noting. But as of now the situation remains ‘cyclical’ and positive with just the smallest hint to the contrary.
I try to take care not to sound alarms, especially based on short-term situations. I try to establish narratives to carry forward. Look no further than the Semi Equipment signals we reviewed several week ago and how they turned out not to be short-term actionable. So as usual, with all due intent not to get overly excited, consider the above a snapshot of minor priority until/unless we close the week in this condition or worse.