Are US stocks in a bear market or is this just a correction? I can’t recall a bear market in stocks topping like this. It is almost always a process. Generally speaking, prices don’t just top and then plunge into a bear market. For that reason, I’ve viewed this as a broad, intermediate correction. If that’s the case, then stocks need to bottom and begin to stabilize. Until that occurs, gold will maintain it’s safe-haven edge.
I went back through the charts, and couldn’t find an example of miners successfully reversing large bearish candles as we got yesterday. I’m comfortable for the moment remaining short. However, if miners were to close above those Fed day highs, I’d consider that a bullish development and gear-up long positions.
-GOLD- Gold reached $1270.10, prices closed above the 200-day MA. Volume was good but not fantastic. Sometimes the battle over the 200-day MA takes several days. The Bulls won today; let’s see if the bears mount a counterattack. Finishing the week above $1270 would support a run into year-end.
The HUI/GLD ratio spiked above the 200-day MA. Since early 2017 this has identified most tops in miners.
-GDX- I went back through the charts, and I couldn’t find a recent example of prices reversing massive bearish candles like we got yesterday. Nevertheless, if prices were to rally and close above $21.36, I’d take that as a pretty serious buy signal and look to get long. In that scenario, I’d probably focus my efforts on silver as it yet to breakout.
-SILVER- If miners reverse and close above yesterday’s bearish reversals, I’ll look to buy silver. Prices are still below the 200-day MA and would probably begin to play catch up to gold and miners.
-GDXJ- Again, it would be extremely rare to reverse yesterday’s overwhelming bearish candle, but it’s a possibility we need to be prepared for mentally. If established, I would then view this as a double bottom and go long juniors and silver.
-JDST- I lowered my stop to just below yesterday’s low.
-HUI- The HUI mining index tagged the 2016 year-end low as well as the 200-day MA. An ideal place for a top. The slow stochastic is overbought and the MACD in diverging negatively. All the signs point to an end to this corrective rebound. Notwithstanding, a sustained rally above the 163 level would have to be viewed as a bullish breakout.
-SPY- Are there any bulls left? Sentiment is in the absolute gutter, but there are still no signs of a bottom. I can’t recall a bear market topping like this. It is almost always a process. Prices generally don’t just top and then crash into a bear market. For that reason, I’ve been treating this as a deep, intermediate-degree correction. But for this to be true, prices need to stop dropping. Until that occurs, gold will maintain it’s edge.
-WTIC- Oil continues to drop. The lower monthly Bollinger band sits at $41.68. I’ll begin scaling into positions if prices slip below that level.
-US DOLLAR- The dollar broke lower from the ascending triangle, and prices are finally fading into a cycle low. At the moment, I don’t have an accurate cycle count.
I’ll monitor the overnight action and update again in the morning.
Have a great night!