Back on November 4th I posted about how my simple Gold/Oil ratio chart, with its positive implications for gold mining operations, got slammed by some drive by gold haters on Stocktwits. At that time we also noted a distinct lack of interest among gold bugs and TAs in the community, many of whom were busily guiding their herds lower.
With a few exceptions, the bug community is briskly bullish now and the stock market damage has turned a majority of market reporters bearish as well. That’s basically what websites that reprint other peoples’ work do, they report the news of what is happening because it is easier for the average writer to sound smart in real time than it is when looking ahead. Again, reference how dumb I sounded to the Stocktwits bashers.
So there is much interest now in the tanking stock market (yesterday’s short covering spike notwithstanding) and the gold miners and precious metals rally at this time.
The next key resistance we’ve been managing for the sector is higher, but not a lot higher. If/as the precious metals complex rises into those zones it will be time to check said resistance and TA parameters, sentiment (including CoT, which is still okay but now well on a trend toward what will one day signal caution) and also the broad stock market “BEAR!!!!” situation.
For now, the gold bugs are kings of the world! Yay them. When enough of them are telling you about it, it will probably be time to expect a thumping. Here’s a representative title of an article already out advising the herds that they are wrong to be stock bulls and very right to be gold bulls.
Gold and Dow: Santa Claws Comes to Town
I am a gold bug. But I am going to follow the sentiment and technical backdrop every step of the way. I wrote the post linked above when the sector was being ignored (at best). Now it no longer is. We have an interesting convergence of technicals showing thick resistance and a Q1 reporting season when the herds are likely to discover why gold mining is a counter-cyclical sector (ref. the gold/oil ratio, etc.) and therefore, a place to invest during cyclical economic stress. Ah, but the stock market is not far from our downside targets either. So add more complication to the equation.
I’ll leave you with the Gold/CRB chart, which itself should indicate how under valued the HUI index of gold miners is, historically. But fundamentals are one thing, technicals are another thing and yet another thing is the behavior of human herds.
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