The stock market declined sharply overnight, and gold is breaking out of its consolidation pattern (currently $1241).
We could be witnessing an undercut low in stocks. If correct, prices should reach fresh correction lows and bottom sometime this week. That’s my guess at the moment; price action needs to confirm.
Miners are set to break higher at the open. They should reach critical resistance and their unfilled August gaps. The price behavior over the next 1-3 trading days should be enlightening.
I see the potential for tops in gold and miners this week.
- Gold is in the timing window of the previous 108/109 day cycle (today and tomorrow). If the cycle inverted, it could time a top.
- If stocks bottom this week as suspected, then gold will probably lose its safe-haven appeal.
- The dollar is still very close to a potential inverse head and shoulder breakout.
- Miners are approaching key resistance/reversal levels.
Price behavior is key going forward. Gold and miners need to show significant follow-through to support higher prices.
-GOLD- Gold is breaking higher from the small triangle consolidation pattern. Prices are testing resistance above $1240. Gold is catching a bid as the stock market declines. There was a 108/109 day cycle in gold that timed significant lows in 2017/2018. This cycle window arrives again today and tomorrow. That brings about the potential for an inverted high between now and Wednesday. It’s nothing I’m willing to act on…just something I’m considering. The price action would have to confirm.
-SPY- Stocks are set to gap significantly lower at the open. Prices are testing the previous spike low. I think an undercut low may be underway. Meaning, we will probably see a 1-3 day spike to new lows that reverses quickly and establishes an intermediate-degree bottom. It’s possible prices bottom as soon as today. I’ll monitor volatility and the NYMO for clues.
I’ll update again sometime after the open.