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[VIDEO] Market Update – Gold, Oil, Equities, Bonds, and USD – Jan 08, 2020

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.

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.
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Strong Move for Metals to Open 2020

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.

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.
Gold Chart
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.
DXY-Long Term
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.
SP500 Gold Ratio
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).
GSR
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.
SILVER 1-03-20

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.
Platinum

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.
Palladium

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.
GDX
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.
PAAS
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.
NEM
As always, I hope this is helpful, and I welcome any feedback or questions. Have a great weekend!
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$DXY Dollar Coiling Up For a Move

DXY-Short Term

The US dollar has frustrated bulls and bears for the past several years, as it has traded inside a historically narrow range without a clear long term directional bias. However, in both the near term and long term charts, it would appear a larger, secular move is coming.

On the daily chart (above), the dollar has traded within an 18-month channel and is testing rising support for the fourth time. Additionally, rising support coincides with falling support from September, which has now been tested three times. This level is significant, and either the dollar is due for a bounce at this confluence of support, or it will break down here sending a strong, bigger picture signal to markets.
More importantly, if we zoom out to to survey the long term chart (below) covering nearly five decades, price action has been building and coiling into a symmetrical triangle. If prices break to the upside, a very long term secular breakout will commence with powerful deflationary effects domestically and across the globe. If price fails, the lower bound of the channel is in play with potentially all-time lows. While we must account for that possibility of all-time lows technically, it would be hard to imagine the US dollar underperforming global currencies so profoundly given the state of international economies, let alone the domestic and geopolitical consequences of such action.
DXY-Long Term
So while inflation, or even extreme inflation, is likely if the dollar breaks down, it is important to note that the dollar index prices the US dollar relative to other currencies, and not absolutely. A more realistic long term target if the dollar breaks down is 80, where there is significant support. It is a zone where the dollar could set up another run up to falling resistance.
The tip of the symmetrical coil in the chart comes to a point on December 31st, 2020. After several frustrating years for dollar traders, next year should bring a powerful secular resolution.
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S&P500 to Gold Ratio at Important Level

In advance of tomorrow’s Fed meeting and decision on interest rates, I am closely monitoring the S&P500 priced in gold. The S&P500 has broken out to all-time highs and has successfully retested the breakout, while gold has retreated ~$100 from its highs in August, either setting up a washout to a new near term bottom (possibly backtesting the entire breakout from $1380), or preparing for a rally to retest the $1580 level after a multi-month bull flag.

Gold Chart

The ratio between the two sits at an important level. After peaking at 5.5 in late 1999 and 2001 (double top), the ratio fell for the next decade, through the financial crisis, bottoming at just 0.5 in 2011. Since then, the rally in equities and the eventual decline in precious metals pushed the ratio back up to the 38.2% Fibonacci retracement at 2.5, forming a nine year channel in the process, which recently broke in August (according to the likelier of two possible channel formations), and pulled back to the breakdown level in recent weeks. Based on this chart pattern, I think near term gold outperformance is a higher probability outcome.
Alternate Ratio
However, we need to respect an alternate chart drawing. Instead of using the 2009 low as an indication for rising resistance in the channel, it is possible to use the secondary low in 2009, which would pull recent action back into to the channel and suggest that the ratio has not yet broken down. In that case, I think near term S&P outperformance is a higher probability outcome.
Alternate Chart
Tomorrow’s fed announcement should help to clarify the picture.
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[VIDEO] Gold and Silver Mining Stocks Price Update

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

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S&P500 to 4500+?

Long term S&P 500

The Monthly Close Above the 261.8 Fib Extension is Significant

The month of November was a significant expression of bullishness in the markets, as the S&P500 knifed through the 261.8% Fibonacci extension with a strong monthly candle close to new all-time highs. Taking a longer term view, the technical tailwind appears to be supporting a run to 4500+ to the 461.8% extension – nearly 50% higher. It is a number that would shock those who already view the market to be in bubble territory. While many are calling for a recession or an outright market crash, this interest rate supported, debt-fueled market shows underlying technical strength, and the US market remains the strongest globally. There has also been recent follow through among small caps and micro caps. The technical picture remains bullish.

However, per the chart above, I want to point out that we are now retesting a two-decade trend line that has acted as support and resistance eight times since late 1997, and is now being tested again. I suspect we may see a bit of a pause here and a likely pullback into the 3060 zone in the coming weeks. Stocks are overbought on the daily RSI, which is encouraging long term, but likely a signal that we could see some softness before the next leg higher.

If you’re looking for a buy signal, a weekly close above the long term trend line should signal that the thrust to the 461.8 extension is underway. Conversely, a significant correction and monthly close below the 261.8 fib extension could indicate the November move was a false breakout. We are at a great juncture for establishing a favorable risk/reward setup right around this long term trend line and fib extension.

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[VIDEO] Bitcoin Price – This is the Only Chart that Matters

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 headed 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.

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[VIDEO] SP500 Chart Update, Nov 19, 2019

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.

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[VIDEO] Gold Price Update, Nov 15, 2019

Gold Price – Breakdown, or Another Leg Higher?

Picking up from last week’s video, I wanted to do a deep dive into gold, particularly because there is a diversity of opinions regarding whether we break down from here or we make another leg higher. In this video, I address a recent chart from JC Parets at All Star Charts and my opinion regarding his analysis in the short term.

The big question is whether gold has completed a fifth wave from the $1170 low (setting up and A-B-C correction), or whether the recent high was only wave 3, setting up a fifth wave higher. I am of the latter opinion.

As always, we would love to hear your feedback whether you agree or disagree.

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[VIDEO] Precious Metals Price Update, Nov 08, 2019

Gold, Silver, Platinum, Palladium, and Copper

In this week’s video I take a look at the charts of gold, silver, platinum, palladium, and copper and offer some thoughts on where I see prices moving next. In the case of gold, which has enjoyed a fantastic run-up from $1180 to $1570 this year (in the process breaking out of a six year base), price is pulling back and bull flagging at the 61.8% Fibonacci retracement. Does it make a push down to $1400 to backtest the entire move? Will silver find support at $16.60 or are we moving lower? Will palladium continue its historic march hire, or will it meet resistance at future levels?

I discuss all this and more in today’s ten minute video. As always, whether you agree or disagree with my analysis, I would love to hear your feedback.

 

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$GC Gold Looking To Break Out of Bull Flag

RSI Turning Higher

The run-up in gold this morning has price action testing the downtrend line from the September high for the fourth time. Gold has been forming a bull flag for the past eight weeks, and $1505 also coincides with the 38.2% Fibonacci retracement from the September high to the October low. Bulls want to see a breakout here; a failure would likely weigh heavily on price and take gold to new multi-month lows at downtrend support. RSI is supporting bullish action and is breaking out of its multi-week downtrend. The bond market is also acting bullishly after cooling off recently, as highlighted in my analysis of TLT, which is also supportive of higher gold prices. (more…)

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$TLT Retesting Breakout and Trend Line

A-B-C Correction At Key Level

After a brief hiatus from posting, I am just now getting back into the swing of things. On a personal note, my wife and I moved the family cross country from Texas to Idaho this past month, and that is an adventure I hope to never again repeat! But life is settling down a bit now . . .

The bond market is a good place to dust off the charts. I closely follow the iShares 20-Year Treasury Bond ETF, $TLT, and my analysis continues to confirm the the correct application of the Fibonacci levels should begin with the secondary high from the 2016 peak, not the primary high. I share some prior thoughts here.

In doing so, we see $TLT honoring multiple Fibonacci levels of support and resistance throughout the last three years.

The breakout from the secondary high occurred in August and failed to close above the 1.236 Fibonacci extension. It has since had an A-B-C correction and is retesting the break of that secondary high, which also coincides with rising channel support. The move from here will dictate the direction for the next few weeks/month. If support does not hold we should expect a retest of 134.50. Otherwise, a move back towards 150 seems very likely. My bias is to the bullish side.

A more granular look on the daily chart from the September high shows a measured move higher, with price retracing to the .618 level, pulling back to .382, pushing higher to .786, and now sitting at .236 (higher low from the September bottom).

TLT Daily Chart

 

Lastly, for anyone interested in learning more about how to apply Fibonacci levels, please join me this Sunday, October 13th, 2019 at 6pm EST for a webinar with my friends at Trendspider. A link to the webinar is here.

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