This update will be completed over the course of several days as we get more data. But lets focus on the important and probably the most confusing sector we cover - the precious metals.
Today we just look at some charts and also discuss the reversal indicators that ended this week. As we reported last week, we got buy signals for both gold and silver. This past week a BUY signal for GLD was confirmed (our gold proxy). The significance of this is that the previous sell signal was way back in October - and up until this week none of the action in gold was convincing or had the follow through to issue a buy signal. This was the first week where we got a reversal buy signal and one that held. So this in itself is a significant signal.
Looking at the cloud chart we see that the formidable cloud resistance was broken in February and after a retreat has managed to bounce right at the cloud resistance near 850. So a bullish candlestick reversal that was confirmed, and a bullish weekly chart pattern indicated we may have a shot to the upside ahead of us.
Silver is a little less convincing, and our reversal indicators have failed the past few trades (other than the big run up from 9.71 to 14). In this case silver has experienced more volatility and is still in a bearish pattern (i.e. underneath the clouds) with formidable resistance. Notice how silver has not been above the clouds since august of last year and is now approaching a formidable resistance with a thick cloud layer. Nonetheless a fully confirmed reversal must be taken for what it's worth - and a phased in approach may be prudent until we can see continued favorable price action.
GDX has flashed a buy alert signal based on our candestick analyzer, but the reliability is low so we definitly would like to see a confirmation before we march ahead. However the postivie development is that GDX has entered the cloud so therefore we are in neutral territory now, something that has taken quite a while to accomplish. If we get a intraweek confirmation we may recommend a partial entry in GDX.
We'll post some COT numbers in the next day or so along with excerpts from other technicians and market analysts. The problem we see here is that there is a possibility of a major leg downward in the market that may drag everything else with it. On the other hand events may turn out to propel gold and silver much higher. In any case, it's prudent to be cautious and not to load up too quickly, too soon. But at the very least - use the stop losses we post, or wait for another reversal signal to get out until we can reposition ourselves for a more favorable entry.
We'll cover energy later this week, along with posting some additional data from other services that will help us put everything together.
