Gold finished on Friday with a bearish engulfing candle. I think prices topped and we should see a pullback. The severity and duration of the next correction will tell us if we should be positioned for higher or lower prices in Q1. At 20-weeks the intermediate cycle is quite mature, at some point, gold will have to drop into a 6-month low.
There isn’t enough evidence to support a top in miners…just yet. We should know more once we see Monday and Tuesday’s price action. Cyclically speaking, it looks like miners could reach the next low between January 14th and 18th.
The stock market is bouncing, but I’m not convinced it put in the final low. I think we will see a retest or double bottom in Q1.
I like the potential in oil, but I think prices will dip below $42.00 before putting in the final low. There is ample support around $42.00, and we are getting an upside reaction. A grinding consolidation is possible for a month or two before a dip lower.
-GOLD- It looks like the 30-day gold cycle inverted and peaked on Friday (slightly stretched on day 34). Prices formed a bearish engulfing candle, and we should see a pullback. It’s been 20-weeks since gold bottomed at $1167.10. The 6-month cycle is maturing, and prices will need to drop into a cycle low…at some point. Going forward – it would take a clean break above $1315 to constitute a rounded bottom breakout. Whereas progressive closes below $1255 would support an intermediate decline.
-SILVER- The MFI is overbought, and prices formed a Doji indecision candle. Prices may still spike higher next week, but I think they should be approaching a top. The next swing high should cap this rally.
-PLATINUM- Platinum rallied nearly 3.5% on Friday breaking free of the triangle consolidation. However, prices remain vulnerable as they trade below the 200-day MA. To support a bullish run prices have to rally and then stay above the 200. A daily close below $800 would trigger a near-term breakdown.
-GDX- If gold topped on Friday miners should be close to peaking as well. A pullback into the 14th – 18th of January fits the current cycle configuration.
-GDXJ- We got a nice tall candle above the 200-day MA on Thursday. However, volume was light, so I think the recent outperformance is due to the abundance of silver related stocks. Silver miners have likely influenced GDXJ higher – not smart money buying. Nevertheless, I’ll continue to monitor for signs of a double-bottom breakout. Prices are currently in the danger zone – just above the 200-day MA, rallies routinely end here. Progressive closes below $30.00 would support a breakdown.
-SPY- Fed chairman Powell spoke with a dovish tone on Friday as he explained how they would be patient and flexible with rates going forward. Stocks jumped over 3% on the news. The McClellan oscillator (below) spiked higher and challenged the November high supporting good market breadth. However, I don’t think stocks are ready to go straight up. We will probably see a double bottom or undercut low in the next month or two before completing a bottom.
-WTIC MONTHLY- I’d like to see oil dip below the lower monthly Bollinger band (currently $40.80) before buying. I’ll use a decline below $42.00 to initiate long positions.
-WTIC WEEKLY- Buyers stepped in at support just above $42.00. I think this is just a buying reaction and prices will dip below $42.00 before securing a meaningful bottom. Prices could consolidate in a triangle type formation for several weeks. It would take progressive weekly closes above the 10-week EMA to support an immediate bottom. Current overhead resistance rests between $50.00 – $55.00.
-CRB WEEKLY- The CRB hit the target box, but it’s unclear if prices bottomed. We may see one more dip in early 2019 that undercuts the 2017 166.48 low.
-BITCOIN- Here’s the August update to refresh your memory. Bitcoin broke down from the elongated descending triangle and reached $3215 in mid-December. Prices topped a year earlier at $19,891. I think prices will enter another consolidation. The $5500 – $6000 level should contain prices to the upside. I think prices will eventually break the recent $3215 low and examine the $2000 zone in 2019. Click to review the November update. Chart courtesy of Cryptowat.ch
-GBTC- If I’m correct we will probably see prices consolidate below $8.00 and then break lower sometime in 2019.
Happy New Year!