I want us to at least be open to the prospect that things can change quickly without [nominal] charts laying out a nice, neat road map for us
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I don’t want to downplay the gold sector’s negative technicals; HUI and silver are still leaning bearish, while gold is pretty damn okay on the daily time frame. Indeed, I am still tentatively short GDX against the quality gold (and one silver) stocks I currently hold.
What’s more, the macro fundamentals are not in line yet, either. See Gold Miners in 2017 Whipsaw for more information on the sector’s technical and fundamental situation.
But after running through charts of several miners (which we are now doing each week both in daily chart format in the Precious Metals segment and by weekly charts in the NFTRH+ Notes segment), we also introduced a ‘what if?’ of sorts at the end of the segment. Check it out below and feel free to let me know your thoughts on its viability.
Everybody knows, after all, that the sector is bearish, especially in light of the dreaded GDXJ rebalance boogey man. But sometimes successful speculators need to be open to outcomes that may not be readily apparent.
After all, how apparent was the stock market top and gold miner bull in 2000? The economy was strong, the markets were booming and the nominal charts did not give many signals. Read below and see if just maybe there is a chance that the bear herds, tended so well by bearish gold sector analysts, might just be proven wrong in the coming weeks.
To the bullish divergence by quality leaders like FNV, RGLD, KL.TO and SBB.TO we can add a ‘what if?’ question about the HUI/Gold ratio; as in what if today’s pattern works the way the 1999-2001 pattern did?
Precious Metals (NFTRH 450 partial excerpt)
I did some public writing on this sector last week (ref. nftrh.com) and we know what is needed: upside technical milestones like HUI above the April and February highs; and macro fundamental milestones like gold outperforming commodities and stocks, along with economic deceleration and waning confidence by the public. Does the S&P 500 at all time highs above our target of 2410 sound like waning confidence? No, not yet.
So here is the daily multi-panel view, simply noting that gold is technically bullish and everything else as of now, is not.
[19 daily charts of royalty and mining stocks omitted as this is subscriber content]
The gold stock sector will be ready to go when it is ready to go. If Energy remains bearish and gold continues going up in relation, we could have the makings of a positive surprise for the April-June earnings reporting season.
We are following the sector more closely now because we are either going to be at the ready if the sector breaks upward, takes out the April and February highs and sets a new uptrend, or spikes down to a perhaps final washout.
Let’s end with a look at the HUI/Gold ratio (HGR) from a big picture perspective. The point is that surprises can happen in markets. The HGR bottoming pattern in 1999-2001 did not look much different than today’s specimen.
In 2001 into 2002 all hell broke loose to the upside and seemed to come out of nowhere. What’s more, the hysterical move upward was not driven by the 9/11 terror attacks. That took place while HGR was still well inside the bottoming pattern box as shaded below. The upside was driven by the failing economy that followed. With the current pattern’s right side looking like a bullish consolidation
I want us to at least be open to the prospect that things can change quickly without [nominal] charts laying out a nice, neat road map for us.
But sometimes successful speculators need to be open to outcomes that may not be readily apparent.
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