As the broad stock market party continues apace, our little precious metals patch is trying to terminate its correction. Yesterday, we noted some important internals, and this morning in ‘pre’, we update the situation, with the footnote that it is FOMC day/week.* A time when the machines can get a little off the hook and instigate volatility.
The Silver/Gold ratio is following through, for at least another morning, on its hold of implied support and the 50 day average.
The GDX/Gold and SIL/Silver ratios are implied to open higher (per the orange “Pre” designations).
This of course could still be just a normal bounce within an ongoing correction that was, after all, much needed. But it does affirm the reasoning given yesterday for covering my shorts/hedges and taking the profits. Had I not done that I’d be plenty irritated this morning.
Speaking of morning, time to go get ready for my treatment.
I’ll decide later whether or not to re-hedge. But the Silver/Gold ratio, especially, looks good and could have ideas about resuming its uptrend. It did correct to a logical and clear objective, after all.
The key now is whether or not the precious metals will regain their positive correlation with broader markets. If they do, everybody could party into year-end. If they don’t, they could be an early signal about the party’s end. In that regard, it’s important to watch leaders.
* 98% of CME traders expect a .25% cut today. 85% of them expect another cut in December.
