From yesterday’s update…
[edit] Please accept my apologies. Futures are down, but not nearly as drastically as what was earlier noted. MarketWatch showed indexes down around 2.5% but Bloomberg had them at around -.5%. A check of the actual prices shows the Bloomberg data is correct. So take everything below as a future game plan in case the August lows are breached.
The news driven short covering rally yesterday was impressive and now momo’s are being punished. Makes sense.
Well, today the expected reversal in USD is firming up as the big down day on Monday gets some follow through. There is nothing much to add to all of…
A technical snapshot of key ETF’s…
GLD has bounced from critical support (equiv. of gold 1180). MACD triggered up is positive.
Well, here came the short covering rally in the precious metals. By calling it that I don’t mean that it cannot turn into something more, but today was most assuredly driven by short covering as the US dollar unwound some of its speculative sponsorship. One can assume that large speculators took it on the chin on both ends, in the USD and in gold/silver as the Commercial traders had been aligned increasingly bearish and bullish, respectively.
The following is an email from subscriber Francisco. I thought I would use it as a basis for an update on gold and the miners today (with his permission). I’ve numbered the points being addressed from his email…
Updating the charts we have used to gauge October’s little bearish ripple and projected bounce back.
With its position well below the ‘205 parameter’, I am not trying to look for positives because that was below our tolerance to begin with. When the Ukraine hype failed as expected our targets were 220, 210 and finally 205 respectively to keep things in order. They are all history.
A brief update on the headline US markets, namely the Dow, S&P 500 and Nasdaq 100.
Beginning with the latter, we note that Mark Hulbert’s Nasdaq newsletter writer sentiment data shows a very bearish sentiment profile, which is contrarian bullish.
Commodities of all kinds have been degrading for months now, as we have noted all along. At some point there is going to be a counter trend bounce. A couple weeks ago we noted that the price of u3o8 was going one way (up) and the ETF (URA) the other (down). That has not changed.
We had noted that the miners could bounce at any time. That time needs to be now for GDX to avoid lower lows. GDXJ, due to its modest out performance, has more room between current price and the June low.
A snapshot of the current technical status of several key markets (a lot of charts today because macro changes seem to be in effect)…
GLD broke down from the Sym-Tri (strike 1), lost the June low (strike 2) and now would try to find support at the December low, equiv. to gold 1180. Over sold, prone to bounce but technically bearish below 120 and 123.
Gold stocks are down again today and it is now decision time (for the sector if not individuals). That is because the parameter is to not make and hold a new low to the May low on a closing basis. We noted that a bounce is possible and if it is going to happen it should happen around here, at the May low with a similar over sold RSI. Either that or it would be broken with a lower low (that does not reverse quickly).
There are a lot of things in play today, including a notable rise in the gold-silver ratio concurrent with USD (finally, these two are both working together, which would be a component of our favored macro plan for future economic contraction, stock market troubles, etc.). But the point of this update is to further the point we made last week about the Emerging Markets’ potential breakdown nominally and in relation to the US market.