Just a simple update reviewing and reminding of we’ve already covered, after the gold stock sector got clubbed last week.
The failure has filled the upper gap and we are looking for the lower one to fill below 27. If it happens promptly without an intervening rally to fill the upper gaps we could see a nice oversold reading on RSI to near the degrees of the March low and the October low, which preceded tradable rallies.
Perhaps the sector will remain weak, bowing before the great and powerful Fed of Oz next week, and perhaps that would be a nice turning point from a washed out RSI reading. That is the way I am leaning.
Alternatively, a loss of the October low at 26.58 opens up the prospect of an ignominious decline to fill the November, 2022 gap at 22.35. I don’t expect that because I think that launch was from an important low. But forewarned/forearmed and all.
A buy at the gap fill (assuming it happens, as expected) with a mental or actual stop loss below 26.58 could work out in positioning for a rally or taking a quick limited loss. A hard stop loss does open up the possibility of getting bear trapped and shaken out if the sector were to break down and reverse back up in-day, so consider that a daily or even weekly close, rather than an in-day event, may be the key. Gold stocks always move in dramatic fashion, after all. Both ways.
“Alternatively, a loss of the October low at 26.58 opens up…”
Hi Gary,
The Nov. 2023 low at 26.58? Or the Oct. 2023 at 25.xx opens up..?
Thanks
I don’t want to see the Nov. low taken out. And the Oct. low would be worse, and more likely if the Nov. low is lost. But again, those are not favored views.
I agree with your techs. And yes pm’s “should” bounce with the broads, but they also often front run the broads. That makes it frustratingly difficult at this stage, as we expect something to happen 12 months after inversion or 5 months after steepening. Then again, it could delay up to 24 months after inversion. It is all so muddy… Bart
Bart, muddy is the business we’re in, and not only with gold stocks. But in the best case I am looking for something different than the last 20 years. In 2001-2004 the USD declined, the Gold/Silver ratio rose and the gold miners were unique. In the best case I am looking for something like that phase, or even longer. You are right though, over the last 20 years the miners have tended to lead the broads at important turns. But if we are in a new phase we may also need to define new rules.
Thanks Maestro, much appreciated. Of one thing I am fairly convinced: if pm’s do not rise along with the broads, or not much, then I am pretty certain they won’t sell off much either when the market downturn starts. Essentially, that could still be interpreted as a degree of anticipation.