I have drawn another version of the USD bull flag on the daily chart. It is in the form of downtrend channel (parallel black dotted lines) that could become the actual flag if the price holds below the top channel line. But previously we noted the falling wedge bull flag, which then broke out (ref. the green dotted line). Technically, the buck is still in a consolidation after making its higher high (possible scout for future bullish activity, whether after a deeper correction or not).
The Gold/Silver ratio held its moving averages and is still in a sideways trend. In other words, silver has not wrestled leadership away from gold.
Bottom Line
The situation is not resolved with respect to an important macro indication, which would be the US dollar and Gold/Silver ratio sending the same signal concurrently. A signal that is either macro bullish (if they both decline) or macro bearish (if they both rise firmly). Thing 1 indicates market liquidity and Thing 2 indicates a lack of liquidity.
I personally want to short these markets but am trying to await the signals. The target for SPX is (not much) higher at 6180. Commodities are still bear-biased (with a potential positive divergence by the TSX-V index). Global markets that are generally anti-USD have pulled back. Gold stocks made a bull move yesterday and today of course they are pulling back from that.
It seems that the market is in a blender, with signals triggering and then un-triggering the next day. A nice whipsaw to keep man and machine alike confused. But the bottom line is that if/when USD and GSR bust one way or the other, we should have our answer on the near-term. If they drop we could have a perhaps final speculative frenzy in the markets (including gold stocks, which are not yet uniquely in their counter-cyclical macro suit.
If USD and GSR rise, especially if they rise impulsively, risk will be indicated to be “off” and people should manage that risk accordingly (cash, quality equivalents or shorting/hedging if so inclined).
A word on outright shorting. It is not risk management. It is speculation. Big difference.
