We’ll keep it simple in managing this morning’s decline. The silver support zone has been 19.50 to 19.75 (chart from NFTRH 300 below). The lower end of this range is getting tested this morning. Any lower than that and the situation becomes abnormal to a short-term bottoming view. A hold of that area ups the aggravation level but would probably be ultimately constructive.
The real or asset adjusted price of gold continues to make positive progress in several areas. Below we update gold ETF GLD vs. a few other asset classes, primarily commodities, which makes up the ‘real’ price of gold and the big picture macro plan per the top pane of this chart. If Au-CCI remains strong, the S&P 500 (lower panel) would be expected to weaken again at some point.
HUI continues to make good improvement by its daily chart, which means that the already constructive weekly chart is gaining the upper hand.
The market bounce is providing a potential opportunity for those who care to, to re-short. As you may know I covered a short on SPY on the recent decline and have been looking to re-enter it. The S&P 500 bounce target has been 1950 to 1960, but let’s refine the situation for the SPY.
HUI continues to make good progress but until the red neckline is crossed it remains in the same positive, but unconfirmed stance with regard to a new rally leg. The red dotted neckline is part of a downtrend channel just as the green dotted neckline is part of an uptrend channel.
While the two charts below do not technically show a correction that is over, I have released the remaining hedges I had (via DUST) and am planning to use cash levels for any remaining risk management. This is just an FYI for anyone who is interested and I continue to suggest people go with the style they are most comfortable with, whether it be accumulate slowly on corrections, regulate cash levels, hedging or simply holding positions.
The headlines are talking about markets being down on Fed rate policy fears due to employment cost increases, declining consumer confidence, Argentina this and European deflation that. In other words, the headlines are coming out with reasons why a market that was heavy to begin with is down hard a day after the Fed rolled over and committed to its ongoing inflation. They always need a story.
A slightly abbreviated Key ETF segment due to ongoing time commitments over the mid summer weeks. Just a snapshot in time, picking up where we last left these charts a few weeks ago…
Well they sure don’t make it easy to get a hard read on things in the very short-term, but one thing we should remember is that this correction is the last correction I expect before a consistent drive upward begins, assuming that either a hard rally or bull market are in the near future. That is due to the symmetry of the weekly bottoming pattern, which will be reviewed in this weekend’s report.
Finally, we have seen the obvious (what most people will now take note of) kickoff to a short-term correction in the precious metals. Depending on the fundamental picture, we can plan on taking advantage of a buying opportunity as we have been noting over last couple of weeks.
In light of the breakout in base metals (which I am still looking at as only a trade via DBB), and bottoming situations in other areas like Uranium (hat tip to subscriber ‘Hammer’) and the REE’s, it is time for a brief update on mineral commodities.
There is no denying the cautious tone of our updates about the gold stock sector this week. Sometimes they appear prescient and then there are other times, like today. Yesterday’s update stated:
A subscriber requested a view of the GDX for his personal management. So I thought I would throw it up here as an update. Today is bounce day (at RSI support), but GDX has not even retraced 38% of the rally. The 62% retrace at 24+ is the favored target for a decent correction that would flush some bugs.
Gold got blown up in 2 days with respect to the short-term rally. Watch for gold to bottom before silver as we likely transition into a phase of gold leadership over silver. Key support is from the 1300 down to 1270.