I made an aside in NFTRH 638 that the market would probably bounce the precious metals to screw up my shorts. Well, it has and it is no big deal. I hold the junior miners ETF (JDST) and modest silver short and am still having a very nice week thanks to precious metals positions held and obviously, the broad market too.
So I am planning to hold the PM hedges until tomorrow at least, pending more bullish activity per the charts below.
Gold is in the area of the converging 50 and 200 day averages as it bounces after the all too tawdry post-FOMC bull trap smack down. If it takes out the mid point of the Bollinger Bands, which is the 20 day moving average, it would also take out the (black dotted) trend line. Barring another head fake, that could send gold on its way. Taking a bigger picture view, this is now a half year old Handle on the monthly chart’s bullish Cup. Meanwhile, gold is still a candidate to test the low-mid 1700s unless it breaks out of this moving average traffic.
Silver is on the other hand, above its SMA 50 and starting to take out the former trend line. It will now challenge what is a long-term resistance area (not shown on this daily chart) of 26-27.50. Importantly, both moving average trends are up. Looking at this, I’ll consider getting rid of my small silver hedge (ZSL). Although silver stocks like MAG, SILV & HL are blowing away any damage being caused by ZSL in that account (also note that I have physical metal, mostly gold and the CEF bullion fund).
It is actually HUI (and GDX) that look the most suspect. However, GDXJ is a bit better and the silver miners ETF (SIL), better still. You can see HUI tapping away at the resistance zone and if it takes that and the downturned SMA 50 out I’ll probably have to get rid of JDST. Meanwhile, below the moving averages it is still a candidate to test the lower support area beginning at 260.