Per a subscriber update from pre-market yesterday morning updating the situation with SPX…
Here is the chart we used in Tuesday morning’s update to show that even with that big down day to come SPX was still safely above key support. Two days of hard testing of that area (incl. the SMA 50) followed. Support remains intact.
Here is the associated chart updated with today’s activity. We went on to define what this rally is and what could change its status, but it does appear that the short-term management worked perfectly; a hold of support.
It doesn’t matter that they are pumping Fed easing hype and Trump/China relief hype out there. It only matters that support held. You can see some noted levels above, which are objectives for the bear rally.
As for HUI, I was not so brilliant. Gold stocks are also getting the Fed easing/trade relief boost as the US dollar (logically) gets dinged. My guarded view was too conservative as Huey gets a boost back above the SMA 50 today. From the update..
Opposite that are the gold miners, which are down trending on the short-term but up trending since September. Huey is still at support but hanging there like a rotting fruit below its 50 day average (note: the XAU index, GDX & GDXJ are all above their respective SMA 50s but GDX is perched below its SMA 200 in a similar way to HUI below its SMA 50).
I continue to be mentally prepared for a drop to or toward the lower channel line if the stock market relief rally resumes. Individual gold stocks are doing their thing (some looking good and others absolutely not) but the indexes/ETFs remain vulnerable short-term.
So HUI held the support we noted but let’s face it, it appears I was too cautious. I don’t believe in hiding from my less than stellar (or even failed) analysis because I do believe in touting the things I’ve done well.
SPX is on a big bear rally as expected. That is its definition unless it takes out some upside objectives and changes the trend.
HUI is and has been in an uptrend since September. We have been noting and respecting that. But it has not dropped to the preferred level near the lower channel line. It’s okay. I am not short anything having to do with gold but not yet fully loaded either. Just patiently managing a change of the macro from cyclical to counter-cyclical, despite the increasingly desperate shenanigans going on at the Fed, the White House and with China’s central planning bureau.
A macro pivot is like a souffle; it has to be baked just right or else it will not come out right. We as casino patrons need a lot of patience and perspective along the way. Time frames and sentiment are really important now. We have been noting over bearish sentiment in the gold miners and rapidly regenerating over bullish sentiment in the stock market.
It’s in process, folks.
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