Friday felt strange, as I tried to point out in NFTRH 623. Normally, a news-driven market holds an efficacy of a day or so. I hate to give in to news-driven markets and normally I’d have been stubbornly bullish in the face of negative news. But something felt heavy on Friday.
Well, it turns out that it indeed appears to have been back to business as usual, now that the negative news has worn off and markets chose to “cheer on stimulus hopes”. Let’s take a quick snapshot of where several markets and indicators are at, using daily charts.
SPX took back the EMA 20 and SMA 50 and voila, bullish again! NDX and SOX had held their MAs and look even better after today’s joy fest.
The Global index took back its moving averages as well.
CRB index is not updated yet, but here is DBC, trying its best to negate the disgusting breakdown from last week. It’s not fixed until it clears the SMA 50 and makes a new recovery high, but it shows how difficult life as a bear can be (as the market celebrates coming fiscal panic policy AKA stimulus).
Gold continues to flag upward. Resistance is in the 1940 area. If that sounds familiar, 1940 was our upside target per the measurement from the February-April pattern. The declining volume is consistent with a bear flag, which this may still be.
Silver’s flag is on declining volume as well.
HUI’s flag of course failed to break down the way Friday’s heaviness hinted. But neither did it break the flag condition to the upside. Still, it’s back above 325, which we noted would be the first step toward undoing the short-term technical damage. My conviction is such that I did not sell my DUST bear hedge positions, but nor did I increase them. I am just waiting for the break, either up to negate the correction or down to a buying opportunity, provided that…
…this chart remains intact. The Gold/SPX ratio banged the 200 day moving average yet again. I am not a big fan of all these tests, but intact is intact for now. In my opinion, it’s a very key indicator for the gold stock case.
In looking at the charts of US market indexes and many charts I either own or would like to own, I cannot say there is much of anything going on that is generally bearish, technically. Friday was a hint, but today undid that. What’s next tomorrow? Another tank job? With this market you never know, but the indexes are still biased bullish after bouncing last week before Friday’s weirdness.
But the issue of the VIX divergence to Inverse SPX got a little more pronounced today. VIX was positive on a day that the market was positive. The timing on this can stretch out for a while. But generally it’s a warning indicator whirring along beneath the surface. Let’s keep an eye on it, but not over react to it.
The above are just some of my impressions on reparations Monday following funky Friday.