Not much happened in the precious metals market yesterday, which means quite a lot if one knows the context.

The context is Friday’s sharp decline. Sudden slides can trigger fast rebounds that nullify the former. This happens when the move lower is accidental, or based on some kind of news that generally doesn’t change the trend, which then – quickly – resumes.

Sometimes it takes just a day to invalidate a move that’s based on geopolitical events, or based on some kind of news that triggers an emotional (yet pointless) reaction. Why? Because the time it takes for the market to move from the emotional approach to the logical approach can vary, depending on what kind of event/news triggered the move. Sometimes investors are quick to realize what’s really going on, and sometimes it takes longer.

For example, one-time gold rallied based on rates being increased by ECB, but the move was very weak, and it took just a day or two for the market to realize that it’s actually bearish for gold, not bullish, even though in the immediate-term the USD Index declined based on the above and gold moved higher.

However, when Russia annexed Crimea, which didn’t result in any dramatic follow-up action, it took a relatively long time for the market to realize that and move below the pre-annexation levels, even though the annexation itself wasn’t cancelled or undone.

Now, the fact that Friday’s slide wasn’t invalidated by a powerful comeback indicates that the move lower is likely to last longer.

There are two things that I’d like to emphasize about yesterday’s price action.

The first one is visible on the long-term chart featuring gold, silver, junior miners, and the USD Index.

The thing that I want to emphasize is that from the long-term point of view… Nothing happened yesterday. It was not an important day, at all. The implications of last week’s profound reversal in gold remain up-to-date. But I discussed them yesterday, so I don’t want to go into those details once again.

The thing that I want to emphasize from the short-term point of view is that on a very short-term basis, yesterday’s price action was a tiny reversal itself.

Nothing really happened in silver, but gold and junior miners first moved higher and then declined later. This is a subtle confirmation of what happened on Friday.

There was indeed a corrective bounce, but that bounce appears to be over, as the price already moved lower once again.

So, as far as the precious metals market is concerned, the outlook remains very bearish.

Also, speaking about the corrective bounces being completed, please take a look at the FCX price chart.

FCX also reversed yesterday and ended the day only slightly higher despite a higher open.

This indicates that the corrective upswing is over. I marked similar cases with red ellipses, and they confirmed that this is indeed the case - that’s how FCX tends to perform before continuing to decline.

This, in turn, means that the profits from our short position in the FCX are likely to increase shortly.

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