S&P 500 And Gold Bulls, Get Ready To Meet The Bears

You see, yesterday I did strike an optimistic tone in the runup to the regular session‘s open, but the bulls missed a good opportunity to act, and the resultant signals favor the bears to step in now. That‘s the essence of my trading style – neither a permabull, nor a permabear, and always ready to turn on a dime should the facts change.

S&P 500 market breadth

The market breadth indicators show we‘re on the doorstep of a push lower. Instead of holding ground, new high new lows solidly declined, while both the advance-decline line and advance-decline volume muddled through. That‘s not exactly a bullish constellation.

Precious Metals in Focus

gold

Gold also appears to be acting a bit weak in the short run. No surprise as I don‘t see the lengthy consolidation as quite over yet. This one will more likely wear you out than scare you out. Simply put, the gold bulls better wait for spring to usher in another precious metals upleg as the miners to gold (HUI:GOLD) ratio isn‘t sending any kind of confirmation that the sector has made a turn.

gold to silver ratio

The gold to silver ratio keeps treading water and isn‘t declining below its early September lows. On the other hand, it‘s not trading too far from them either, which translates into silver not acting at its weakest exactly. That‘s a bullish sign, showing that this 5-month long consolidation is really getting long in the tooth.

miners

Completing the picture, miners (GDX ETF) reveal lackluster short-term performance. Long upper knot and volume as low as could have been, mean that we better brace ourselves for a down session today.

From the Readers‘ Mailbag

Q: Hi Monica, congratulations and best wishes on your new venture and I look forward to following your work.

I’m an English working class boy, now very Grey who follows the gold market like a hawk. I’m a longterm investor in PM’s sector and I have a largish position in PM miners (still in profit on most) but the last six months are playing havoc with my nerves. The best metaphor I have that describes my current situation is that I have a large bowl of golden soup with a big fly swimming in it. I recently read an article on Jan 25th that outlines “where to now Gold” with a possible/probable decline of gold to between $1500 – $1600. I was rather hoping you might comment on this analysis and on how you see things developing over the coming months. I appreciate that you don’t give financial advice but this very bearish view is discomforting given the mad world we have around us and if Gold could crash to these levels in the current situation it begs the question why bother investing in PM’s.

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