I am not sure what caused the decline in markets, including the precious metals this morning (other than a spike in long-term yields) because I had an early commitment (as I will most mornings for the next one to two weeks), but what it brings on is a test of the stock market’s break above the daily chart trend lines we noted in NFTRH 499, and possibly an end to the gold sector’s bounce, below the target of HUI 190.
On the former, it will work itself out one way or the other. I held all short positions other than BA yesterday, which broke above my tolerance point and sold some longs to raise cash, all per the Trade Log. I want to evaluate how the market does with short-term support before making any rash decisions. But we have noted that the VIX was too complacent, which was a short-term negative. So a pullback to test support at least is not surprising.
As for the gold sector, I only sold NEM and thought about selling a few others. Unfortunately, I sat on the rest of the positions. But since this is/was only a bounce I am not prepared to give the sector the benefit of the doubt. So profits and/or losses will likely be taken if pre-market follows through to a bad trading day. My plan is to hold the best items, which to me are KL, PAAS and SSRM. Possibly a couple others. It bears repeating: the gold sector is not and has not been ready from a fundamental perspective.
I’ll plan to do an update later in the day as things develop. But right now the above is my initial reaction.