There were subtle signs of topping on Thursday as Gold and Silver both formed Doji’s (cross-like formations). This candlestick pattern sometimes appears near cycle inflection points.
GDX rallied to the 200-day MA and subsequent BreakPoint. However, prices failed to close above these critical levels. The March rally has reached the maximum retracement level for a corrective rebound.
GDXJ exhibited notable signs of weakness on Thursday. It may be the canary in the coal mine for precious metals. Breaking below its trendline (see chart) could lead to a strong decline.
The Syrian missile strikes likely extended the rallies in precious metals and oil. Nevertheless, the prospects for a decline into May remain. Significant weakness early next week will support interim highs in precious metals and miners.
-US DOLLAR- The Dollar retraced 50% of the move to 101.26. To remain bullish, the dollar needs to breakout above the trendline. Dropping below the critical support line would imply a significant breakdown.
-GOLD- Prices formed a small Doji on the 24th day of this extended cycle. A Doji sometimes forms at cycle tops/bottoms. Weakness on Monday would support a cycle top. Note: The MFI did break higher, but it remains below the February peak (divergent high).
-SILVER- Silver prices also formed a perfect Doji. Closing below $18.42 will make a swing high, provided prices don’t exceed Thursday’s $18.60 high.
-SILVER H&S PATTERN- On the bullish side, I see a possible inverse Head-And-Shoulder pattern. If silver prices zoom through resistance between $18.70 and $19.00 the pattern will activate. The estimated target would be $22.50.
-GDX- Prices closed below the BreakPoint and the 200-day MA. Closing below $24.38 will mark a swing high and probable top.
-DUST- The volume in DUST was exceptional (possible bottom). Closing above $25.14 will make a swing low. The extended downswing eliminated the original May target. If prices bottom soon, a move to $36.00+ still seems reasonable.
-GDXJ- Junior Miners can’t get off the ground, despite higher gold and silver prices. Breaking below the trendline could initiate a dramatic selloff. Note: Volume was significant on Thursday.
-JDST- Breaking out above the trendline should spark a rally into May. I adjusted the potential target slightly.
-SPY- Prices appear to be rolling over. Progressive lower closes below the 231.61 low would propose a decline to the trendline or 200-day MA.
-WTIC- The extended bounce may be over. The Energy ETF (XLE) broke down sharply on Thursday (see chart). A daily close in crude below $52.70 would make a swing high and likely top. Note: I will remove the remainder of the hedge on my short position if prices drop below $52.70.
-XLE- The energy ETF often leads crude oil. Prices broke down significantly on Thursday, oil could follow.
Gold is entering the 18th week of the current 6-month cycle. The trend is mature, and prices should begin the decline into the next 6-month low. May or June should time that bottom.
The current daily cycle in gold is stretching. These extended moves tend to persist longer than most expect. Trying to pick a top can lead to heavy losses. It’s best to wait for a confirmed top or just wait to buy the next 6-month low.
Expect another tumultuous week. I will be watching Silver and GDXJ prices carefully. Silver breaking out above $19.00 (daily close) could lead to additional gains for precious metals and miners. However, closing below the trendline in GDXJ would indicate a breakdown.