Metals and Miners are stuck in neutral. They haven’t advanced enough to confirm a bounce nor have they weakened sufficiently to initiate the next decline. Closing lower again tomorrow could set the table for another drop.
Rebound or not, we expect lower prices before reaching a sustainable bottom. The price pattern in GDX requires a decisive break beneath the $20.89 level before investor sentiment is appropriately purged. Too many traders have been anticipating a major breakout. It’s our belief that the next leg higher won’t begin until these investors lose hope and surrender their shares.
The Dollar is still foundering, and sentiment is unmistakably bearish. We are entering another cycle turning point, and prices could rally next week. Consecutive closes above the 10-day EMA will institute a 1-3 month rebound.
-US DOLLAR- Dollar prices are testing the 95.22 low, and a bottom is unconfirmed. The cycle is stretched; consecutive closes above the 10-day EMA should register an intermediate rebound. Once a low is secured, we should see prices rally through the 6-month trendline and test the 200-day MA by mid-September.
-GOLD- Prices are running into resistance at the 10-day EMA. However, a swing low formed as prices closed above $1,215 on Wednesday. Next, we need a close above the 10-day EMA to designate an interim bounce. I highlighted a congestion zone that is expected to contain price…if a rebound is confirmed.
-SILVER- Prices reversed after checking the 10-day EMA. A daily close below $15.40 will initiate a test of last Friday’s spike low down to $14.34.
-GDX- Miners closed just shy of the 10-day EMA yesterday and formed a bearish black candle. Today a swing high developed. Consequently, a rebound is still unconfirmed. A daily close below $21.40 will setup another test of the $21.00 support zone. Ultimately, we expect prices to break the May $20.89 low before achieving a sustainable 6-month bottom.
-GDXJ- Juniors also formed a swing high after producing a bearish black candle. Closing back below the $31.50 level will propose an immediate retest of the May $29.33 low.
-SPY- Prices are holding the trendline breakout, and closing above 245 will initiate a run to 246-250 by the end of July.
-WTIC- Prices closed above $45.50 and formed a bullish engulfing candle. We don’t expect a sustainable low until September or October. Nevertheless, prices could challenge the $48.50 – $49.50 zone before launching the next decline. Closing back below the 10-day EMA will signal the end to this rebound.
I’m out of all short-term positions. Trading will continue to be choppy and arduous until an actual trend develops. My plan is to preserve capital in anticipation of the next 6-month cycle low.