NFTRH; Stocks, USD, Bonds & Gold Miners (high priority)

Well, the stock market bounce lasted the majority of 1 day before fading late on Wednesday. Going by the quant on the seasonal I sold part of my SPY position and waited for what the historical data said should have been a positive day today to sell the rest. But it does not look like that will play out, at least if pre-market is not preparing to whipsaw market participants.

SPX (2649.93 at Wed. close) could just be testing the year’s lows, which were 2532.69 in February and 2553.80 in March) but the short-term bounce pattern is gone and in light of that the market is on ‘prove yourself bullish’ status. Not the other way around.

So barring a bullish reversal here, my plan will be to raise cash yet again. On Wednesday’s bounce I did some selling (SPY and SIMO), some buying (CVSI and GSV) and some shorting (QQQ, SOXX & CRY) per the Trade Log. But cash is the thing I can manage best, and that is what I’ll do. From that perch I plan to comfortably gauge whether a holiday season support test and relief or bearish breakdowns will be in play. The Feb. and March lows will advise on that.

As for gold stocks, by the look of GDX in pre-market they look to give back less than half of Wednesday’s gains as GDX is bid at 19.61 (Wed. close was 19.81, +.51). GDX should hold Wednesday’s low of 19.45 or there could be short-term technical trouble.

The fundamentals will only improve if stocks proceed down and oil/commodities continue to tank. But let’s also realize that the Gold/Silver ratio is still rising and that is antagonistic to gold stocks. The average gold stock buyer is after all inflation-focused and that is not what is in play if the macro comes apart.

Bond yields are down and the US dollar is up, and these are the things that go with pain in the macro markets. They are the traditional first receivers of scared money seeking liquidity. They are also the things that feed gold mining forward fundamentals. But again, the bugs usually do their most vigorous selling while the funda improve because then people are becoming increasingly fearful of deflation.

Using Q4 2008 as just one extreme (the same happened to a lesser degree in 2015) example, let’s realize that price and fundamentals are two completely different things and the sector does not usually turn on a dime with its true fundamentals. As we noted during this past earnings season, miners reported results from a Q3 in which the funda were not good at all. So we now look ahead (and hopefully front-run) the Q4 reporting season of Q1 2019.

But the weekly chart of HUI asks us to realize that the sector is not yet of the woods, and it is still Q4 2018 after all, with tax selling in effect.