Metals And Miners Are Bouncing
Metals and Miners are bouncing as the dollar finishes what appears to be a small inverse head and shoulder bottoming pattern. If our analysis is correct, the rebound in precious metals should end next week. A daily close above 97.50 in the US Dollar will establish a breakout.
A breakout in the dollar should lead to a 1-3 month rally. Precious Metals and Miners are expected to descend into their 6-Months lows as this occurs. The lengthy bottoming process in the dollar produced an expanded double top in gold.
US DOLLAR
The bottoming process continues. The 96.30 low should hold, and a daily close above the trendline/neckline (97.50) will imply a breakout. One could argue a small inverse head and shoulder pattern.
GOLD WEEKLY
After dropping to $1,241, gold prices rallied to close flat for the week. The Stochastics (indicator above) rolled over, and we expect prices to work their way down into the 6-Month low.
GOLD DAILY
Prices are rebounding after touching the 200-day MA; they failed to strike the intermediate trendline. Prices could rally a bit more, but the bounce should finish next week. Once complete, we should see a breakdown below the intermediate trendline. A rally above $1,300 would invalidate our forecast for a 6-Month low.
SILVER WEEKLY
Silver prices ended flat after sinking to $16.31. Once the intervening bounce is complete, we should see prices test the critical support zone.
SILVER DAILY
Prices are bouncing, and we could see a brief rally to the 20/50 day moving average crossover (around $17.10). Once complete, prices should decline to critical support at $15.68.
GDX
There was more selling into strength (220-Million) in GDX. We expect the bounce to conclude sometime next week between $23.00 and $23.50.
GDXJ
Junior miners could test the $35.00 level and perhaps the 200-day MA before rolling over. We should then see a decline below the May trendline.
DUST
I may consider buying DUST if prices reverse next week and maintain the short-term trendline.
JDST
I’d like to see prices hold the lower trendline. A daily close above the upper boundary would register a breakout.
SPY
Prices are compressing along the 10-day EMA, and the sideways action will end with a sharp move. If prices break lower, we could see a swift shakeout to 240 before reversing higher.
WTIC
Prices should be nearing an interim low. I’ll alert members if I see a setup for a short-term trade.
We are entering a decisive week. If prices follow our expectations, I’ll consider shorting miners and perhaps silver. I’ll post brief updates throughout the week as the action unfolds.
Disclosure: None.
AG, you seem to be reading things very well.
Here's an update:
Gold dropped through its 200-day moving average of $1241 this Monday morning >dropping almost $11 in one swell swoop at 3:55AM
>hitting a low of $1,239.01 at 8:20AM
>before bouncing up to $1,245.81 mid-morning
>before beginning to decline once again (currently down to $1,243.59).
We may well be on our way to that 6-month low that you forecast.
Thorson contends that:
>A breakout in the dollar should lead to a 1-3 month rally. Precious Metals and Miners are expected to descend into their 6-Months lows as this occurs...
>Prices could rally a bit more, but the bounce should finish next week. Once complete, we should see a breakdown below the intermediate trendline.
>A rally above $1,300 would invalidate our forecast for a 6-Month low."
Mark Baillie comments in his TalkMarkets article (www.talkmarkets.com/.../gold-docks-in-its-box) that:
>"Week-after week, we've gone on ad nausea about Gold's "1240-1280 resistance zone...
>'Course, the prior week, Gold only barely breached the upside 1280 boundary before again falling back.
>Perhaps we ought forget "support" and "resistance" and simply go with the "1240-1280 box" and leaves it at that.
For more indepth analyses of the current situation for gold check out the following 3 articles:
1. Jordan Roy-Byrne in a TalkMarkets article (www.talkmarkets.com/.../gold--gold-stocks-nearing-a-big-move) says:
>"Gold needs to break $1300 and GDX needs to retest $25 again...
>Until the Gold sector can attain those marks then the bias for the next big move...should remain to the downside. That is why we remain cautious."
2. Hubert Moolman agrees illustrating that fact in a graph in an article (www.munknee.com/gold-chart-says-a-massive-move-up-or-down-is-imminent/) that shows that:
">Gold is currently trading near a critical 6-year resistance line that the gold price has to overcome, for the continuation of the gold bull market.
>Since price has now failed more than four times at the line, there is a great chance that we could see a big drop.
>If the price is to turn around and break through the resistance line, then a great amount of energy is required to fuel such a move – and that can only come from a collapse of a big market like the general stock market, or the bond market.
>When gold breaks through the resistance line, however, we will see a gold rally like that of 1979/1980."
Moolman also maintains in the same article that "there is a peculiar fractal that suggests the current situation for gold is very similar to that of May 1979, just before the massive rise in gold" illustrating that possibility/likelihood in a long-term gold chart which is self-explanatory.
3. Sean Brodrick looks at it slightly differently but comes to the same conclusion, more or less, saying in www.munknee.com/this-could-be-the-most-important-gold-pullback-ever-to-consider-buying-into-heres-why/ that
>"if gold breaks its 200 day support (at $1,241)…THAT would be a heck of a buying opportunity.
>IF we break support...then you should buy gold and miners with both hands because that will likely mark the beginning of the next Mega Bull trend.
> The market won’t really turn bullish on gold again, however, until it pushes up through $1300."
Anyone taking issue with what Thorson, Mark, Jordan, Hubert or Sean have had to say? If so, I'd like to hear from you.