Market News

DOLLAR MOVEMENT WILL BE KEY IN 2020

I made a brief video this evening to quickly run through some key charts I'm following and where I see the big picture trends.

https://youtu.be/uQLwX8DfA-o

ENERGY

In energy, I cover crude oil futures, $XOP and $XLE.

PRECIOUS METALS

In precious metals, I cover the charts of gold, silver, platinum, and palladium futures, as well as the S&P/Gold ratio. In mining stocks I review $GDX, the GDX/GDXJ ratio, Newmont Mining ($NEM) and Pan American Silver ($PAAS).

CURRENCIES

For currencies, I stick to the US Dollar ($DXY), looking and both daily and long term monthly charts.

FIXED INCOME

In fixed income, I review the 20-year treasury ETF ($TLT), mortgage backed securities ($MBB), and high Yield corporate debt ($JNK)

EQUITIES

In equities, I take a quick look at the S&P500 and and the micro caps ($RUMIC).

As always, I hope this is helpful, and I welcome any feedback or questions.

PRICE PREPPING FOR NEW 7-YR HIGHS?

Happy New Year! We are kicking off the New Year with stocks at all-time highs, oil prices spiking on Middle East tensions, and the precious metals complex following through nicely for our November/December videos. If you haven’t had a chance to watch those videos, they offer a helpful background on the technical setup for metals and the price action we are seeing today.

12-03-19 Gold and Silver Mining Stocks Price Update (Video)

11-15-19 Gold Price Update (Video)

GOLD

Gold finally broke out of a bull wedge in late December following a four month (healthy) consolidation I had labeled as wave 4 of 5 in a five wave Elliott Wave pattern. This pattern has been neatly contained within a rising channel from the $1180 low in summer of 2018 to the September high of $1565 (the 61.8% Fibonacci retracement from the all-time high in 2011). The breakout occurred at rising channel support, and unless this is a truncated fifth, the length of the rise should target a move to the 78.6% retracement at ~$1700. Gold has some work to do to get there, and will likely consolidate/pull back as it works through supply between $1560-$1580.

The move is supported by strong confirmation throughout the mining complex, the breakout in silver, the overbought levels in the RSI (strong indication that the bulls are in control), the outperformance of junior miners relative to the producers, and a falling gold:silver ratio. The dollar has also shown recent weakness, breaking down from a multi-month channel, and is coiling into a multi-year symmetrical triangle that is likely to break strongly up or down before year end.

I would also add that gold has been outperforming the S&P 500 since September of 2018. This is not well publicized, especially as equities continue to make all-time highs, but an important development, to be sure.

Lastly, I tweeted this chart of gold performance by months for the past 20 years. It is worth noting that January tends to be a very strong month for gold.

SILVER

Silver has lagged gold for six years but is finally showing some signs of strength. The gold:silver ratio has fallen from a peak of 93 in July to a near term low of 79 in September, and has pulled back to 86 in recent week. However, the trend is now down, and the recent move is forming a bear flag that should take the ratio lower (good for the entire metals complex).

Silver has followed a similar pattern to gold, moving in a rising channel from the September ’18 low. A strong close above 18.78 would signal that a move towards the 38.2% Fibonacci retracement at 22 is the likely terminal move for Wave 5.

PLATINUM

Platinum has underperformed the sector for years. Price has flirted with the psychologically significant $1000 level twice now since September. However, the key level for platinum is $10-40-$1050. A break above that level would set up a test of the 38.2% Fibonacci retracement at $1300.

PALLADIUM

Palladium has been the all star of the metals complex, even through the bearish six year trough for gold. Price skyrocketed to just under $2,000/ounce as it met with resistance at the 361.8% Fibonacci extension and multiple rising channel resistance. If Palladium can breakout here, the next price target is $2250.

MINING STOCKS

I will not outline charts here of every mining stock I cover, but as a brief overview, see the charts below of GDX (Gold Miners ETF), PAAS (Pan American Silver), and Newmont Gold (NEM).

GDX has mirrored the technical pattern in gold. The key level is 31.50. A strong close above that level should usher in a swift move to 39.

Pan American has already broken out well above former resistance and seems poised for an eventual retest of all-time highs at 37, likely pausing at 29 along the way.

Newmont is just now breaking above the 43.30, but not definitively. A clean break above that level would set up a run to 51.

As always, I hope this is helpful, and I welcome any feedback or questions. Have a great weekend!

MINING STOCKS LEADING GOLD HIGHER?

I produced this video on the gold and silver mining sector last night, and as of this morning gold is up significantly and all of the mining stocks continue to follow through. Gold (see chart above) just broke above horizontal resistance and is now looking to break up from the August downtrend channel. A move above $1495 would resume the uptrend from 4Q18, where channel support recently held. As presented in early November, I continue to believe this is a Wave 4 of 5, and that we will retest the highs at $1560-$1580. A close above $1495 would confirm it.

In the video below, I cover price action in some key mining stocks as well as the gold:silver ratio and the S&P:gold ratio. If gold is going to make another push to $1560-$1580, we want to see miners lead the way. Thus far, they are showing strength, which is a positive sign for bulls.

Some of the stocks covered in this video:$GDX $GDXJ $ABX $NEM $XME $WPM $GOLD.V

https://youtu.be/nc72p3bryXU

BITCOIN REMAINS ABOVE LONG TERM TREND LINE

In this video, I analyze the Bitcoin chart. Opinions on bitcoin tend to be very polarized; some believe bitcoin will rise to over $100,000 per coin, or even a million dollars. Others believe bitcoin is head for zero and into the dustbin of history. In this video I try to take a balanced view and simply look at the long term chart and where price is trending. I overlay this chart with Fibonacci and Elliott Wave analysis to arrive at the conclusion that bitcoin is still very much in a long term uptrend.

What do you think? We'd love to hear your feedback.

https://youtu.be/luhWjFt_bpY

S&P500 MEETING UP WITH LONG TERM RESISTANCE

In this video, I analyze the S&P500 chart, which is now meeting up with 20-year long term resistance and the upper bound of its year long channel, but is also breaking out above the 261.8% Fibonacci extension from the 2007 peak to the 2009 bottom in equities. My short term view is bearish, as I think overhead resistance is stout and the RSI is overbought. However, longer term, the break above the 261.8% extension is significant and supportive of higher equity prices in the coming months.

https://youtu.be/Xyh544zN5qg