I may be just a tad ahead of myself, but it appears to me that most everything needed for a significant change is in place for gold, miners and the stock market generally. It appears that gold and the miners are about ready to take a much deserved breather. It also appears that the US Dollar is close to breaking to the downside, allowing the stock market to not only rise, but do so with a major propeller from the oil sector.
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This first daily chart is the SPDR Gold ETF (GLD). Both the True Strength Index (TSI) and Money Flow Index (MFI) indicators are showing signs of breaking down.
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Click on the charts to ENLARGE
This second chart is the Market Vectors Junior Gold Miners ETF (GDXJ). Price is painfully negative divergent from both the TSI and MFI indicators. It is difficult for me to imagine that upward price can do much on the upside from here.
This next chart is a 4 hour look at the US Dollar, including the overnight trade bringing us up to a couple hours before the stock market opens today. In my view the US Dollar has pretty much got itself in a situation where it cannot win. ie it's inevitable it is going down....sending the stock market up.
Finally, a 4 hour look at Brent Crude Oil, including overnight trade bringing us up to a couple hours before the stock market opens today. A significant sector of the SP-500 is the oil sector. It appears ready to kick in and lend support to a rise in the stock market.
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hi john,
ReplyDeletethanks for the insightful info
have u any idea of what gold and silver will slip to in the short term?
jack foley
Commodities often rise together, especially with a falling dollar. Are you saying that the dollar will fall, but Gold will also fall?
ReplyDeleteHi Jack - my best guess on gold is that it will drop enough to fill the gaps still open below in GLD. What that works out to in price per ounce, I have no clue. I would use that as my 'get ready to rebuy' signal for both gold and silver, along with my use of the TSI and MFI.
ReplyDeleteOK Jack, I just looked at a chart of $gold. It should retrace - at least intra-day - to around $1205 to 1210. It has just completed what is known as a T1 pattern. From July 28, gold rose $40, consolidated around $1200 for 4-5 days, then rose another $40. That completes the T1 pattern, now the expectation is that the correction will bring price back down to retest the previous consolidation area ($1200). I don't think there is a chance in *ell that it goes below $1200 for more than 5 seconds and I doubt it more than just barely trades below $1210.
Anonymous - Gold and the Dollar have been moving the same direction for the past 7 months. Only in the last month have they begun to split paths. So, anything is possible, yes.