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Summary of NFTRH 752 and the macro situation leading up to it

nftrh 752 summary

Precious Metals

Email Response to a Subscriber About Gold’s Technical Situation

To address what may be on a lot of peoples’ minds after what has been a stellar rally in gold, I’d like to reproduce my response to a subscriber’s inquiry. Specifically, she was asking my opinion of another TA’s view that gold is losing momentum and is in more of an ending to a mature uptrend than the beginning of a new surge. My response:

Well, he’s a TA and he’s seeing TA things. It’s why I have my ‘men who stare at charts’ shtick. There is no way that gold (or many other markets, IMO) should be managed purely by TA. So no, I don’t necessarily agree.

That said, gold is getting overbought and a correction can come at any time. But as long as the macro indicators remain firm (for example, as long as gold does not get hammered while stocks and commodities rally strongly it’s [a would-be correction] a buying opportunity).

Gold is banging blue sky resistance for the third time now. That is meaningful. It does not need to break through this time, but it sure could. But again, I am burdened by the macro as opposed to only looking at charts. As long as a big relief trade does not break out (possible), gold relative to the rest of the macro is in good shape. If the happy stuff breaks out I’d probably increase happy stuff positions and just have patience with gold.

The vulnerability in the gold market is in the elements that have driven the metal nominally and in relation to the cyclical, risk ‘on’ and inflation sensitive stuff. A spark of relief and casino patrons will go right back to normal “happy days are here again (and so is greed and FOMO!)” thinking. That could rhyme with our less favored broad rally upside scenario of a test of the highs (ref. SPX).

Friday’s public article gives a clear view of the fundamentals for gold (and especially the gold mining industry) still intact. As long as that remains the case in those and other macro indicators I am thinking like an investor. That does not mean I will not trade (sell, buy, manage risk, etc.) but it does mean that we are on the big picture view with an eventual target for gold at 3000+ and HUI at 500 (conservatively, IMO).

But nothing goes straight up and the corrections will come. This is not a gold or gold stock pump house. It is a market service with its only goal to try to be as close to correct about macro situation as possible. NFTRH is bullish on gold not because it is supposed to be, not for the harebrained reasons so often touted by perma-promoters, not because I want the world to fall apart, and not because of religious or political views. The current view is bullish because the macro fundamentals and technicals say so.

Speaking of technicals, well…

TA is one tool among several to be used in managing the situation. The article linked above gives a checkup on the still intact macro. Meanwhile, blue sky for gold (2090) will probably not come easy. Here is the weekly chart showing the metal moderately overbought to the degree that ended the last two rallies. It could easily correct from this point. Indeed, it probably will get some volatility.

A pullback would be normal and healthy from a technical perspective if it holds the 1875 area. A drop below 1810 would abnormal as in ‘something is wrong here’. That is the currently higher low that would need to be held. There is a little weekly chart gap on the gold chart and a gaping one on GLD that can fill at said higher low at the “normal” 1875 area. Forewarned is forearmed and all.

gold price, weekly chart

Having considered the macro fundamentals and the technicals above, let’s also get an updated view of gold’s Commitments of Traders, courtesy of Tradingstar. Here we see large Specs (Managed Money) eating the rally as they normally would and Commercial Hedgers (Swap) shorting it as they normally would. We find the readings approaching levels that ended the last rally in March, 2022. It fits well with the signal by RSI in the chart above.

But it is not that simple. I’ve marked up the chart to show that there are different levels of enthusiasm and much will depend on the macro and what is in play there. For example, in 2020 a maturing gold rally got pushed into extremus as the COVID crisis unfolded. Gold’s CoT had already been very extended and then as the COVID news began to spread in late 2019 the emotional backdrop took on a life of its own. Gold earned the subsequent correction that bewildered so many bugs as the newly manufactured inflation phase took hold in mid-2020. This was due to that extreme and the need to work off that sentiment.

Gold commitments of traders (COT)

With gold probing all-time highs, we could see another push to a CoT (sentiment) extreme as it breaks out to much fanfare and noise-making. Or gold could get shut down soon in line with weekly RSI and the CoT data now approaching the last correction’s trigger levels.

The bottom line is that a correction is coming and we have to deal with that. We don’t know when it will come or from what level. We have to deal with that too. Meanwhile, if the macro fundamentals remain engaged and some happy fantasy (and bubble resumption) does not break out, it is probably best to make like Old Turkey from Reminiscences of a Stock Operator: “It’s a bull market, you know.”

Old Turkey just sat on his positions like a mother hen for that reason. That does not mean don’t trade, but it does mean that if you do trade there is risk of a bull market leaving you behind. I will plan to hedge a little and have already taken profits on a couple of non-core items. But I want to keep my eye on the ball, and that ball is a potential break to blue sky in gold (which I don’t care about as a long-term investor) and the finally positive leverage effects on the gold mining industry that gold’s standing within the macro would create (which I very much care about as a gold stock speculator).

While we are on the subject of CoT, let’s also review silver, which has been the leader of the rally in the PM complex. So, is silver’s CoT heading in a direction that will one day trigger a correction? Yes. Is the situation extreme by historical standards? No. Not at all. CoT is implying license for silver to continue to rally, or at least not looking like it would be a reason for it to stop rallying.

silver commitments of traders (COT)

HUI Gold Bugs Index (weekly chart)

Okay, so HUI is at clear resistance. What it also is… is bullish. If I were to guess my guess would be that it takes a hysterical break above resistance, eventually meets the upper trend line and a lower high to the 2022 high and then gets hammered. Ah, but he’s acting like a swami with the guessing (what swamis and gurus call forecasting). I am waiting for the next buying opportunity, so that scenario would be fine with me. But so would a pullback now from resistance to a higher 2023 low, above 211.

But the chart is certainly not instructing an imminent correction. Could happen, but weekly MACD, especially, appears coiled for a surge higher. Regardless of what happens in the near to intermediate-term as casino patrons the world over try to make sense of things (they’ll lag being sensible and instead provide future FOMO thrust) the key point to keep in mind is that IF gold continues to outpace cyclical markets – including gold mining cost-input markets like energy and materials – THEN the gold miners would finally use leverage to the upside rather than the downside on the bigger picture.

HUI gold bugs index, weekly chart

In plain English, I am bullish on gold stocks as long as the macro trends in play now continue and that bullish view includes the coming corrections. Furthermore, I have learned through experience not to try to guess when corrections and rallies will happen. Cycles analysts have that stuff covered but I have sitting on trends and macro views covered. Just call me Old Gary the Turkey.

GDX (daily chart)

Let’s revert to our daily ‘management’ chart using GDX. Gold stocks are becoming overbought on the daily time frame. Experienced players know that such a signal can bring on volatility, consolidation, correction or… a surge to even more overbought levels. It’s a sign of bullishness and it pays to realize that for every long player afraid of a correction there is another player FOMO’ing at the mouth waiting for a correction in order to buy.

We established the down gaps from 2022 as upside objectives for a reason, and that reason was exactly what GDX is doing today, bulling its way up there to fill them. The lower one was filled last week and two more remain unfilled. It is reasonable to think GDX could have one more thrust in it to test resistance and fill the next gap. But risk of a pullback or correction is rising. To boot, there is a gap above the ‘higher low’ level of 26.59 from early March. Much like a gold pullback to the 1875 level to fill its gap, GDX could conceivably pull back to the 26 area to take care of that gap and mark an important higher low.

As a side note, the gap way down at 22.72 still lurks. Could it ever fill? Folks, if Armageddon ’23 were to happen as did Armageddon ’08, anything is possible. Recall that glorious opportunity to buy came at HUI 150 after I’d already started buying 100 HUI points higher. The difference between then and now and why I think an Armageddon event is a lower probability is that back then gold mining fundamentals shifted from very poor to very good in the crash. Today the mining macro is already grinding into a positive state. Also, 2008 came at the end of a long bull market in the miners, much of which exhibited deteriorating fundamentals and over-valuation.

GDX daily chart

But playing devil’s advocate about hard correction potential, how could such a thing happen for a supposedly bullish sector? Why, I am glad you asked. First of all, as noted above it is far from a prediction. Secondly, if the broad macro were to abort its FOMO’ing bear market rally as inflation fades uncomfortably and economic deceleration intensifies, there would likely be liquidation in gold stocks, which have led the Q4-Q2 rally and would be vulnerable to the rally’s fate, fundamentals or not. How many inflation bugs (sellers in waiting) are hiding out in the sector?

Frankly, I would love a situation where gold stocks get hammered hard along with a failing macro. In other words, a table pounder opportunity would manifest if the miners get croaked while their best longer-term fundamentals kick into gear (a microcosm of Q4, 2008 perhaps). But again, that is a swami looking into a crystal ball (or do swamis charm snakes?). Whatever, the situation is bullish and corrective opportunities will come. I do not want to lock and load right now. But I also don’t want to abandon positions.

The waiting place is just fine for now. For people (and speculators) just waiting…

the waiting place
Source: Wikipedia

US Stock Market

Referring to the daily ‘management’ chart (much like the GDX chart above) of SPX we find the Q4-Q1-Q2 rally fully intact from a technical perspective, not overbought by RSI and having turned MACD positive. This is really frustrating the bears who just know how bearish the situation should be! But this is the stock market, not what should be. And no, I don’t look for nefarious forces desperately trying to keep stocks aloft. I look for peoples’ misplaced emotions and sentiment and I look for some machines programmed for max mayhem, using the ‘Fed relief’ angle to its fullest.

The best target has been for a gap fill at 4219 and perhaps a test of resistance just above it. The next best upside target is the only other upside target, a test of the highs around 4700 based on a measurement of a bullish pattern on a weekly chart. Don’t think it can come about? Think again. That said, I’d prepare to have an abundance of caution on a gap fill at 4219. If that were to come about with a moderately overbought daily chart and sentiment getting briskly over-bullish caution would be warranted.

Someone asked me last week about the downside parameter at the December low and whether that remains the bear trigger. The short answer is no. The longer answer is that with the upside work that has been done since that low was successfully tested we’d raise our trigger to March low at 3808.86. But speculation on a resumed bear could come from higher levels if/as sentiment, overbought and other factors come into play as mentioned above.

spx daily chart

While this post shows that Semiconductor leadership to Tech is wobbling and could indeed be an early warning in the making, Tech continues to lead the broad market and NDX is fine nominally, where an ongoing bear market rally is concerned.

The minimum object was to fill the lower gap and NDX almost did that before pulling back last week. The post linked just above does show that the mainstream is starting to get the clue about Tech and this would be an important FOMO-maker and guide toward a sentiment extreme and rally end. But as yet we remain on the bear market rally theme being led by Tech. The targets are a gap fill at 3211 and if things really get exciting a couple gaps up higher, much like with GDX. Hmm, so much for the uniqueness of gold stocks just yet, eh?

nasdaq 100 index (NDX)

Global Stock Markets

Here are multi-panel views of several global stock markets. For a general view of world markets we find the World holding support and in a constructive looking pattern. This is similar to SPX in the US and if we are correct about the longer-term bear market view this pattern’s objective would be to suck in the FOMOs with “happy days are here again!” sentiment. If I am wrong about the BMR, it is also what a new cyclical bull market could look like. This too is much like the US indexes.

These charts are for general views of support and resistance, which indicate a relief rally still generally intact. The charts are not exhaustive TA, obviously.

In the lower panels we have Europe looking good, Great Britain at resistance, Canada’s TSX going sideways and Australia’s AORD hanging around at critical support.

global stock markets

Japan’s Nikkei is still sliding along sideways, never having hit the long-term support below 24000 that could have turned me into a buyer. Not bearish, not overly bullish. NIKK is trapped below resistance and nested above support.

Hong Kong appears constructive if the recent little rise is a right side shoulder. If it’s a bear flag then not so much. India is in a sloppy sideways and of no interest. EM could get interesting if it, like HK is able to create a right side shoulder.

Canada’s TSX-V is always of interest in its guidance about the speculative inflation trades. Da ‘V’ has been slithering along very important support for much of the last year. If it continues to hold commodity/resource stocks would not be a disaster at least and could resume rallying at most. If it does not continue to hold, it would be a grim sign for the inflation trades, at least.

global stock markets

Casting the view to Latin America, Brazil’s stock market is not in a pleasing formation at all as it tries to hold support. Argentina must be burning Pesos down there. But what do I know? I have not looked into the situation and do not plan to. But something sure has driven the MERV upward.

Mexico on the other hand is more reasonably bullish. The story goes that as US/China tensions mount US companies are ‘re-shoring’ of sorts. Or at least re-continenting to Mexico and its lower risk and still reasonable labor costs. Whatever, MXY is bullish and has been bullish since it broke to blue sky. What’s the saying, “there’s always a bull market somewhere”?

Africa and the Frontiers can bounce, especially if EM rallies. But these are obviously cyclical bear markets.

global stock markets


Here is what the price manipulators at OPEC+ did last week. They cut oil output in a desperate attempt to rig its price. It worked in the short-term, but in my opinion this is not a fundamental underpinning to oil or by extension the CRB index. If it is to evolve to something more WTI will take out its SMA 200 (not shown), which is still higher at 84.17 and sloping downward. For now, both CRB and WTI (daily charts) are below resistance and the all important SMA 200. Period.

CRB index and crude oil

NatGas/Energy: Natty is two things; 1) in crash mode and 2) probing very long-term support from which a strong rally could come at any time. It is also another thing; of no current interest, personally. Energy sector stocks logically got a pump with the oil price. Despite that, I have little current interest. I could be wrong about Energy and have been in the past. But it’s not an area of great competence for me. I go by what I see and what I see is a manipulated market with too much noise in it currently.

Copper & Industrial Metals (GYX): Finally! Finally, gold clubbed Doctor Copper upside his head in an attempt to right-mind the China reopening copper pumpers. The Gold/Copper ratio was most recently updated in Friday’s macro article on gold miners. Gold vs. the wider industrial metals complex is even more bullish. Very much so. Nominally the good doctor is still in downward consolidation for most of 2023 that does not look particularly bearish. So I am not saying ‘don’t buy copper’ or ‘sell copper’. I am saying its signaling vs. gold indicates a disinflationary and likely forward deflationary and counter-cyclical environment out ahead. Copper miners dropped hard to near the SMA 200, bounced hard and can continue to rally. But little personal interest at this time after selling FCX.

Uranium: The technicals went from bounce to failure. URNM had a small ‘W’ pattern that it bounced from and then promptly failed back to the lows. Can bounce at any time and a fundamentally sound area for the future. But the warning is and has all along been that the inflation trades are vulnerable and Uranium is most often lumped in with the inflation trades. NXE, URNM, SRUUF, UUUU and CCJ are on casual watch as usual.

Lithium, REE, Nickel, Palladium & Platinum: Li is still in tank mode and watch list stocks ALB and LTHM are in terrible technical shape. REMX continues in its bear trend and watch item (and likely future long-term hold for strategic reasons) MP is very similar. The Ni price is not far above its lows of the last few years and not of current interest. TLO.TO/TLOFF is the priority watch item there. Pd is firmly trending down and testing the SMA 50 from the underside, thus far holding below it. Pt is functional above both the SMA 50 and SMA 200, but is technically neutral at this time. The watch item is SBSW, which is still very depressed and trending down.

Agricultural (GKX): The index is testing its major downtrend from the underside of the daily SMA 200. It is bearish until further notice. However, the ETF, DBA, thinks it knows something that GKX doesn’t because it is on the verge of breaking out of a base pattern. Here I’ll remind you that we did have a couple of individual Ags seasonally bullish (on average) into June/July. I have little current interest but if you do, you might want to check the seasonals and do deeper research on the Ags in general. A quick look at the situation shows something going on with Sugar as it blows off to the upside while most others remain in the dumps.


USD and Gold/Silver ratio (GSR) continue to correct and that is an enabling factor in the ongoing broad rally and if you want to look at commodities positively, a benefit. But if you look at commodities in a negative way, as I do currently, if they’ve been this weak with a weak dollar, they likely be even weaker if USD and GSR were to rise together.

us dollar and gold/silver ratio

Last week I was pondering this weekly chart and another ‘A-B-C’ scenario hit me. Not being an EW analyst please take my musing here with a grain of salt. But if USD were to break the neckline of the H&S pattern that you, I and a world full of chart dorks see might this not have been an A-B-C downward correction within an ongoing long-term bull market?

The other view we’ve been operating to is an A-B-C upward correction within what might be a new bear market. Ironically, if Uncle buck breaks the neckline I think it would ultimately prove more bullish on the long-term while breaking bearish on the shorter-term. If the neckline is lost, this view will likely come to the fore.

US dollar and gold/silver ratio

The multi-currency daily chart shows theoretical gold ally CHF/USD the best of the bunch with the Euro and a supposedly firm ECB behind it a close second. JPY/USD is okay, the commodity currencies (Canada & Aussie) are relatively weak and the British Pound is solid.

global currencies

Finally, the weekly BTCUSD chart we’ve been using is still bumped up to the underside of the resistance target beginning at 30000. I am sure the people with lasers in their eyes are getting a little bit of hope going now, and that is what this rally is for. Take out the 35000 area and I’ll have to eat, err revise those words!



Savings balanced by gold.

Trading Account: no positions

Roth IRA (non-taxable, no contributions)

Cash, S/T Treasury equivalents and Treasury bonds, all providing income, are nearly 88%. I retrenched recently due to certain suspect signs I was seeing (e.g. Semi fading leadership, for one) but the report above shows the bear market rally still well intact. If Tech picks up again I may add a few others. For example, I have an eye on GOOGL, which at last look had a constructive chart for a rally from a base. There are others.

The Q4-Q1 rally is now the Q4-Q2 rally and given the persistence of the 2022 bear cycle it is logical that the elements for an extended rally are in place. I’ll play it do a degree. Meanwhile, the bigger view out ahead is for a worse bear phase than 2022 and from that quite possibly a more extended bull phase in the counter-cyclical gold mining sector. For now, here is my fairly boring but stable situation.

roth ira

Cash & income-paying Equivalents are at levels that are right for me and my real-world situation. Your situation is different. Cash will be adjusted as needed.

Refer to the Trade Log under the NFTRH Premium menu at for trade info, if interested (not that you necessarily should be). Also, you can follow at Twitter @NFTRHgt for notice of updates.

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Notes From the Rabbit Hole (NFTRH) is a weekly market report in which we provide analysis on financial markets.  We make every effort to provide accurate and high quality content, but this analysis ultimately represents our opinions and these opinions are provided without warranty or guarantee of any kind.  See full terms & conditions of service under the ‘About’ heading in the main menu.