Gold And Silver Prepare For A Momentum Rally

Today we warn of a potential downside price rotation in precious metals that may last 3~5+ weeks as metals set up for a massive breakout rally which we believe will start in late April or early May. Our custom indicators are suggesting that precious metals and the general US stock markets may be setting up for a bit of a reprieve rotation after a very impressive recovery. Be patient as we believe this pullback in prices will provide an excellent buying opportunity for the eventual momentum rally setting up in about 30+ days.

Let’s start by looking at our Custom Market Volatility indicators. The Weekly chart below highlights the recent recovery in the US stock market since the December 24th, 2018 lows and also shows that the current recovery level is sitting right at a 61.8% Fibonacci level. It is our belief that a period of general price weakness will begin to unfold over the next 10~15+ days in the US stock market. This rotation is very healthy for the next leg higher – the momentum rally we have been suggesting will take place in the near future.

We believe the downside rotation in the US stock market will be the result of renewed calm from expectations that the global economy may begin a recovery process as the US/China trade issues and other geopolitical issues seem to become more resolved. The recent upside move in the US stock markets was a flight to safety for many foreign investors fearing that US/China trade issues would result in very harsh outcomes near March 1. If the trade issues appear to be close to a resolution, this flight to safety trade may wane a bit over the next 10~20+ days as emerging markets may see a dramatic upside bounce in valuations.

(Click on image to enlarge)

How does this relate to Gold and Silver? It is very likely that the upside pricing pressure in precious metals will stall a bit as the global equities markets take center stage. If our analysis is correct, the developed markets will contract while the emerging markets take focus. This falls right into line with our analysis that the US stock markets will pause/rotate over the next 10~20+ days in preparation for a larger upside price swing.

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TheExitFirm 1 month ago Member's comment

The indicators in your chart do suggest a divergence and, therefore, price heading down for a bit. That bit I get. But I don't get your logic for prices to go back up again. All we've got on that is your assurance that your (secret) internal "custom indicators" are promising big price rises to come. ;)