Folks, gold is bouncing today and yet the chart below is a bearish divergence, as the 30-5 yield ratio (top panel) continued to drop like a stone. For effect, the nominal 30 and 5 are shown in the lower panels.
What to watch for with respect to a precious metals drop that could be the beginning of a climactic decline:
Well hallelujah! Finally, we have a move in the right direction by our friends at the Fed. Token though it may be. We needed a signal toward change and we got it.
A self-explanatory chart of two of the old tech guard. I would like to buy both of these back for a potentially quick trade at the shaded support zones. AAPL is clear. MSFT has a gap at a lower support zone. That looks like a tough fill, but I have seen stranger things happen. I may hold out for that lower level.
Recently two things were mentioned in NFTRH.
GLD is bouncing, reclaiming the ‘neckline’ to the bearish pattern (as noted, gold itself already did this). Within the pattern a Triangle is drawn. Big resistance is the 50 MA’s and the nose of this Triangle. Success there makes it neutral. Ultimately, GLD needs to make a higher high (above 130) from the October high and get MACD green to be a bull.
The Small Caps (Russell 2000), which have been market leaders, have led this mini correction. RUT is now nearing a point – by the 50 day moving averages and by RSI – that has limited all previous pullbacks. Watch RUT as a signal to a traditional bullish late December into January or the opposite, a more severe correction. A breakdown from the MA 50’s would break the mechanical trend of the bull of the last year.
The first 5 headlines on a popular gold website I reviewed this morning are either flat out bullish or scouting for a bottom. The gold bug mind is tattered, but alive and intact. Despite this, I think it is time to get serious about the potential for a bottom in the precious metals complex.
Because these stocks were highlighted as potential trades, I want to keep tabs on them for anyone who is interested.
GLD is right at the line that puts some bull potential back in the picture. What I find most interesting is something that was mentioned last week… gold starting to respond in a positive way despite the dreaded ‘taper’ talk. This reinforces our view that the sooner taper begins, the better (still subject to short term negative reactions depending on a majority of traders’ perceptions).
This morning I initiated positions in AAU and TGD to go with the existing KDX.TO. They were essentially flat when bought and I do not plan to chase anything. The…
As if we needed more complications to our decision making, here is the sentiment graphic as of yesterday’s close.
A two in one update. First for traders only, a look at a stock I am adding for a tax loss, January effect type play; BRCM. Folks, I am not trying to turn sensible people into traders so please disregard this in the likely event that it is not for you.
Today could be an important one for the precious metals. The ‘jobs’ report was as strong as could have been expected, precious metals dropped hard on the knee jerk but have bounced back in pre-market. That reversal might mean something.