Tonight’s election results and tomorrow’s response will likely determine where gold and silver are headed for the balance of the year. A strong rally tomorrow and we can probably take the head-and-shoulder topping pattern off the table for GDX and HUI. Whereas, a significant decline tomorrow will boost the odds of an even further price drop (secondary 8-year low) into the first quarter of 2017.
Everything seems to be coming to a head! I plan to review the election results as the polls close and will update members before the open.
-US DOLLAR- The dollar closed above yesterday’s high and the 10-day EMA signaling a potential cycle low. If prices close higher yet again tomorrow, I’ll label 96.94 as an established cycle bottom.
-GOLD- Prices closed for the second session below the 10-day EMA and we are in the area where I would expect to see the common cycle low #1 form. We could get a wild spike higher similar to the rally of out the #1 low in June. I’m considering a buy stop limit on gold futures around the $1,300 level if it looks like prices may spike.
-SILVER- Silver is yet to close below the 10-day EMA (similar to common #1 in June). This relative strength could lead to another strong rally if prices don’t break substantially lower tomorrow.
-GDX- We should have a good idea which scenario (bullish or bearish) is playing out by the end of tomorrow’s close.
-GDXJ- Price has support at the blue trendline, 200-day MA and the previous low of $36.96. Prices closing below all of them will be a bearish signal supporting a further decline into the first quarter of 2017.
-SPY- Prices are approaching the trendline and tomorrow’s close is important to the near-term outlook. I’ll update in the morning before the open.
-WTIC- Oil is bouncing off the 200-day MA, and I expect $46.50-$47.00 to cap this rally. I’m not looking for a cyclical/seasonal low until January.
We should have a good idea of which scenario (bullish or bearish) is playing out by the end of the week. Hold on; it could get a little sporty.