Summary
A brief summary of the work done in this week’s report and in the updates and reports leading up to this point. Please read the detailed report for the complete picture. There are many granular details that cannot be summarized so briefly.
Precious Metals (bull market)
Anticipating one final decline to a good low if/as current bounce fails. That would be a possibly epic buying opportunity.
US Stock Market (bull market)
Anticipating perhaps more short-term bounce, but analytical storm clouds gathering for a significant correction.
Global Stocks (bull market)
Not a refuge if US stocks correct. Indeed, if USD firms, it could weaken global relative to US.
L/T US Treasury Bonds (bear market)
Bonds need to hold here as TLT tests its pattern top. If L/T Treasuries break down, it could force reevaluation of our near-term themes.
Commodities/Resources (bull market)
Not time yet to position with any conviction, in my opinion, as the Fed plays hawk and market liquidity is constrained. [unchanged]
US Dollar (cyclical bear market, L/T still a technical bull market)
USD is well on its way to or toward ‘C’ of an A-B-C rally. This is within a cyclical bear, itself within a still intact major bull market, technically. [unchanged]
USD and Gold/Silver ratio rallying together would likely bring liquidity-driven corrections across asset markets.
Moment of Truth for Gold and Silver
Very simply, gold must clear and hold both the resistance zone at 4280 to 4365 and the “death crossing” 50 and 200 day moving averages in order to signal freedom from the ongoing correction.
“But Gary, you always go on about how a Death Cross usually resolves bullish and a Golden Cross resolves bearish.”
Yes, you are right. And that is perhaps the bounce that is happening right now. If it follows the usual script, this situation could screw over both the Death Cross obsessives and those who think gold is ending its correction. It’s a bounce, and it has potential to ram upward to or temporarily through the moving averages in the 4460 (+/-) area.
This is not to say the correction is not ending. It is to say that it has not ended. Not technically. Meanwhile, 3400 would be a gift for gold buyers.
Silver made a 5th low (third lower low). That could normally be a correction low. However, for that to be valid the current bounce would probably have to be strong, taking out the moving averages and all that resistance congestion up there. That’s a tall task. A valid lower and final low could be and probably still is ahead.
As for gold stocks, HUI may look to test the top of the of the wedge and associated strong resistance, including the moving averages. The SMA 50 is about to “Death Cross” the SMA 200. A perfect time for a bounce to screw the cross folk. Then a perfect time for a failure to screw the “massive bull wedge” promo folk.
Huey (monthly) is bouncing from the TOP of the anticipated support zone. If the gold and silver bounces fail back into correction, we’d expect HUI to correct deeper into the support zone. A 50% Fibonacci retrace to around 570 seems reasonable. But if, for the sake of argument, gold stocks are leading the broad stock market into something quite bearish this summer, we have the 62% Fib around 478 on watch as well.
Bottom Line
The bull market correction is not over. The sector is on an anticipated bounce. Reading more into it than that at this time is wishful (or biased) thinking.
Stock Market
But that does bring me to a more important point. A question, actually.
What if the precious metals are indeed leading the broader stock markets into a more pervasive correction than the internal rotations we’ve had to this point?
With the Semiconductor sector at nose bleed heights (much like gold in January), but in a short-term roll-over/volatility stance, including my former darling ALAB and other AI-related Semis, that could be another warning that a pervasive correction is getting closer.
Sure, we’ve been enjoying stock picking within the market’s internal rotations, but what if the Cloud Software rally hits some upside resistance targets, the Cannabis stocks either get bad political news and tank or get good news and blow off, and Healthcare stocks (XLV) continue to rally vs. broad stocks (SPY), while likely feeling pressure nominally?
A break of the downtrend and rise above .24 by XLV/SPY would be a negative sign for the broader market.
Meanwhile, the US market leadership chain is bending but not broken. Personally, I’d want to wait for clear breakdowns before trying heroics from the short side.
While daily SPX fools around outside its Diamond consolidation pattern (relax, it’s a TA novelty!) around our original upside target of 7400, deciding whether it is going to go up or down…
…let’s note the Fib grid from the 2025 low on the weekly chart. In the event that the consolidation above is a prep for downside, as perhaps led by the precious metals, we note the 50% Fib from the 2025 low at 6222 and the 62% Fib at 5892. Those two levels sandwich support from the Q1, 2025 highs.
SPX already more than Fibbed 38% and any coming pullback/correction could be much more mild than the above, but there is that open gap at 6618 on the chart above and the precious metals, if they lead to the downside as they did the upside, could be guiding SPX to some real price damage. All of this, if applicable, would be pending the ‘internal rotation’ Olympics finishing up.
Or the pig could just continue to rotate and stay fully intact.
But let’s raise a note of caution here. One hypothetical outcome could be precious metals finish bouncing, as market internal rotations finish their bull moves (for example, software) and the whole mess wheezes and rolls over into a summer correction.
Then later, as the investing world is enveloped in fear, with for example the AI/Semi play starting to come unwound, we prepare to capitalize. Likely first in gold/gold stocks/silver/silver stocks, and then in other areas.
It’s a plan. Not firm analysis. Something that I see as quite doable at this time. If this plan (precious metals bounce/rally is terminal and broader markets follow the PMs into the next correction) I will plan to have sold most long positions. I’ll be watching gold and the miners very closely at the noted bounce objectives above.
Meanwhile, we’ll keep a close eye on internal situations like a potential VIX divergence to SPX.
Like the spread between Junk bonds and quality bonds, which eased last week after we noted a little hook upward, but a still intact risk-on environment. This week risk-on appears even more intact with a little pullback.
And let’s not forget the SPX A/D line, which is bullish and ticking a new high. It is a positive divergence to the stock market, which is well below its highs.
With these and other intact indicators, I don’t want to sell indiscriminately or start shorting, outside of individual situations that may appear set up for shorting.
Strategy (personal)
So yes, I am in love with certain positions. How the precious metals stocks I bought are bouncing, how Software came ripping off the lows, corrected and ripped even harder. How Cannabis is steady in its uptrend after breaking upward from a base, how Biotech is nice and bullish, how Medical Devices may be coming off a bottom.
I am in love with all of it. 2026 is moderately profitable (+6.24%) despite a major correction in precious metals and following a very good 2025. But with the help of some charts and the way the precious metals are acting, both to the upside of this bounce/rally and previously to the downside, I feels ins me bonze that there could be some issues ahead.
I could envision myself going through another spurt of selling everything that isn’t nailed down. I already did it once, and so it will be even easier to do it again. However >>>
I can also envision myself scaring investors out of quality positions in a market that does not follow the path I am speculating about above. It is so important for you to realize that your letter writer is synthesizing lots of inputs and analysis, and using his faulty brain to anticipate outcomes. That faulty brain can and will be wrong.
So consider me a digger upper of ideas, potentials, even probabilities. But never ever consider me anything remotely like a guru. To get your guru card you have to keep pounding a theme, through thick and thin over the years, through various cycles, until the thing you have pounded, the thing you are known for finally comes true. Then you and your marketing department tout the living shit out of it. Sample media headline…
Man who called XYZ crash now has a new prediction
Here at NFTRH we will either be right, or be humble enough to get right as quickly as possible. My orientation is to avoid the interim bear cycles and benefit from the interim bull cycles. Not to ride through those cycles on the way to maybe being right (or all too often with our Guruesque friends, perma-wrong).
My favored plan right now, on July 4th 2026, is…
- Anticipated precious metals bounce finishes up at resistance noted above.
- Along side that, certain stock market hype sectors (e.g. AI, Semi) weaken.
- Along side that, we finish up rotational recovery bounces in the beat downs like Software.
- We perhaps get a big shot upward in Cannabis MSOs on favorable political news…
- …or a big decline on bad news.
- Biotech finishes up its bull run, and broader Healthcare outperforms, which could mean declines less.
And then a significant correction resumes in the precious metals and resumes/begins in most markets. In the meantime, things look bullish for the short-term (measured in weeks, if not days).
Bessent/Warsh
As you know, I have a scenario in my head where these two are in close cahoots. I believe these types are cynical, sneaky and in some cases morally bankrupt.
Not just Warsh (with a little Bessent on his shoulder whispering in his ear), but going back through Yellen (as both Fed chief and TreasSec), Powell, Bernanke, the TreasSec who got caught up in the Epstein files (I can’t remember the creep’s name, but he was most recently a professor at Harvard).
They are sneaky. They have to be since the Fed has worked with Treasury Sec’s over the years to manufacture the regime of Inflation onDemand, which is my term for inflationary policy created at will every time the economy and or stock markets cycled down.
By extension, that is the root of the societal problem in the US. Rich fabulously richer, not-rich poorer. That is what inflation is. Asset appreciation, which naturally benefits asset owners. Again, not rocket science.
As noted in reports/updates leading to this report, the 10yr-2yr yield curve has been driven into a flattening posture. Thus far it is seen as a relief by some segments of the market. On Thursday, the payrolls report came in 50% weaker than anticipated. Policy-sensitive sectors (led by gold) celebrated.
A flattening curve is generally benevolent. A steepening curve, not so much. The curve can steepen under inflationary or deflationary pressure. If the game plan I’ve outlined above is even close to accurate, the curve would very likely steepen under deflationary pressure. So we’ll watch that closely. Thursday’s little hook upward does not (yet) a steepener make.
But the main point is what I’ve parroted over the years. If the Fed and Treasury are going to manufacture a new inflationary bailout, they will have to do it with inflation fears out of the picture. There would be nothing like a market correction as speculated upon above to tamp inflation right out of the public’s mind.
Of course, it would help the deflation (scare) case if TLT would hold here and not lose its daily chart bull pattern.
Commodities
Again, commodities get short shrift because we are not yet ready for the Supercyclers to resume the bull. That would be some time after gold bottoms and turns up for real. If that has already begun in gold, commodities should soon follow. But as laid out above, I don’t think it has.
Favored sub-segments continue to be Uranium, Copper, Ni/Li/battery materials, and Rare Earth. But NatGas and Crude Oil will eventually catch on. The broad Energy sector (XLE) is currently looking bearish.
I am also keeping an eye on the Ags, with the most likely investment destination being Fertilizer plays like IPI, NTR, MOS. Indeed, IPI’s (base breakout) chart looks like it is setting up a buy now.
US Market Sentiment
We noted a depressed VIX in a potential divergence to SPX, above. We also noted the risk-still-on condition as per Junk bond speculation. All is good!
No, all is probably not good when looking out a few weeks on the horizon. That is what the chart of the Equity Put/Call ratio implies. The chart fades the indicator (grey) and focuses on two moving averages that tend to signal caution when they cross (red above grey).
The stock market does not correct every time the MAs cross, but in 5 of 6 market corrections during the history of this chart, the MAs crossed first. Reference the vertical red lines.
Today, red is crossed above grey. Taking it a step further, there was a recent spike in CPCE and that plays well with our theme that the correction is not yet here. That might have been a little fear jolt keeping the market situation contrary bullish in the very short-term.
I am omitting the Fear/Greed index this week because I just don’t think CNN has put much thought into the interpretation of its components when summarizing it as a collected index. Some weeks some individual components are relevant, but this week I’d rather use my own home grown stuff like the SPX A/D line and VIX divergence earlier in the report. Like the CPCE directly above.
Also, as a reminder, while I was sick last year my Sentimentrader subscription lapsed and I lost my legacy subscriber status. I’m not paying $99/mo. for a load of stuff I never read to begin with. The darn Smart/Dumb money data was all I primarily used, and it is not necessary.
Speaking of Dumb (or at least contrary) money, the NAAIM (investment managers) took a little off their enthusiasm. That rhymes with the CPCE spike above. A little show of jitters that could extend the rally in the very short-term, but NAAIM is generally over-bullish.
Here’s my home cooked view. This market appears ripe for a significant correction.
AAII (Ma & Pa) likewise pulled back the enthusiasm, which could work contrary bullish in the very short-term. But the chart has been asking whether peak bullish has already been registered on America’s front porch. Hope you had a happy 4th, Ma & Pa.
Sentiment Bottom Line
Short-term permissive of a bounce. Bigger picture ripe for a market correction. This rhymes with other aspects of analysis in the report above.
Global Macro Notes
I’d like to put forward an idea that has been mentioned previously, but not really expanded upon. Recall back in 2025 when, in advance, we viewed the plunge in the Silver/Gold ratio as a precursor to what would become a snap-back and rally in not only the precious metals, but commodities and many other markets as well.
Today the Gold/Silver ratio is recovering from such a plunge.
And USD has clearly based, broken out, and despite last week’s little joy fest after the weak jobs report*, remains in base breakout mode.
- Giving rise to the idea that the Fed would reverse its current stance and go dovish again. Which is very likely not going to happen based on one economic report.
This of course is the scenario in which the 2 Horsemen of the Macro Apocalypse would ride.
Gold/Silver Ratio: implies liquidity problems for markets when gold (more monetary, less cyclical, less inflation sensitive) rises vs. silver (more of those things).
US Dollar Index: receiver of liquidity fleeing asset markets during liquidity crises.
All adds up to: a macro condition where the Fed – in cahoots with Treasury – is given license to rescue the markets and economy once again, from the prospect of the dreaded deflation.
Deflation cannot be allowed to happen because asset owners would implode. America is about the wealthy and in my opinion will continue to be about the wealthy as long as the current system is in place. Of course, logically there are pockets of socialist resistance forming against the corporate/wealth socialism (Federal Reserve system and both political parties) that has ruined America.
Lest I devolve into politics, let’s just say a capitalist view is bullshit, because real capitalism has not existed in America in a long, long time. If this view offends, so be it. It’s the truth. We have a Federal Reserve system and political structure that work together to bring socially destructive inflation… every damn time.
The way I see the dynamic illustrated above (a potential continued rise in the GSR & USD amid market liquidity drainage) is as a trigger. The trigger cannot be pulled until it is time to shoot the bullet. The bullet will not be fired until there is something to shoot at. What will be shot at is the fear of deflation.
I am not making predictions here. I am seeing a logical progression in this week’s report and making you aware of it so it can be subjected to your own logical scrutiny.
If it plays out, I don’t plan to bitch and moan about the system as much. I plan to capitalize on it by being cashed up and ready.
Meanwhile, though I am tempted to retake China (TDF) and maybe look at a couple other areas of interest, I don’t think global markets would escape a USD-centric liquidity crunch, if that view is correct. So I’ll have patience. At this time, the ACWX (World)/SPY (US) ratio is intact to its base breakout.
If this breakout were to fail, it would be one more token in play for a wider stock market correction (Global stock markets theoretically being more anti-USD than US stock markets on balance).
Portfolios
Gold is long-term risk management & monetary value/stability in a balanced portfolio.
“Savings” Account
This account should get back to respecting its name. It is too ‘in the market’ if the risk analysis in this report is on target.
The “Savings” account will vary in its positioning. At times when I am confident of bullish markets it will hold positions, while remaining primarily a cash/equivalents account. At times I am not, it will not substantially hold much beyond cash/equivalents.
Trading Account
No positions.
Roth IRA (non-taxable, no contributions)
The chart is bullish, but I am cautious.
Maybe to a lesser degree than the portfolio above, I will look to take profits and limit losses here. Best case would be the game plan as illustrated:
A little more rally, a significant correction and a potentially very significant buying opportunity, beginning with gold/gold stocks/silver/silver stocks.
Cash & income-generating Treasury bonds are at levels that are right for me and my real-world situation. Your situation is different. Cash will be adjusted as needed.
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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.
