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Midweek Market 27 Sep 2018

Sep 27th, 2018 No comments

Executive summary

The New York Stock Exchange continues in exhaustion mode with new lows continuing to exceed new highs in closing yesterday by a margin of minus -51, extending the negative trend for over a month now as the Dow Jones continues slightly higher peaks driven by ever lower energy. The fractured character of non-confirmations across all platforms in world equity markets continues as the interest rate in the US continues to increase with yet another rate hike yesterday while the US bond market continues it’s long term collapse as yields continue to rise. The interest rate cycle has turned up and is gathering momentum, and as basic economic theory dictates “as interest rates increase so asset values decrease”, so too will the equity markets also follow suit and bend to that basic economic law.

The US$ has resumed its decline in a multi-month correction which stalled this week, supported by the US Fed rate hike on Wednesday. The concomitant effect of a weaker dollar is a stronger gold price, which has also stalled in it’s multi-month rally. The likelihood of another US rate hike this year is strong and therefore it begs the question as to which way the dollar versus gold will tilt in the next period. Worldwide currencies versus the precious metals complex, plus miners, and indeed all resources and commodities, are therefore at a tipping point which will either extend or reverse the rallies of last month. This in turn is likely to accelerate or retard the next round in the Emerging Market contagion which stalled as the dollar weakened.

 

US$

The US$ index bottomed with the added impact of the US Fed rate hike yesterday, and is poised to move up out of the support zone. The turnaround bounced off 200-Dema and will no doubt be assisted by the ending Doji candle which usually indicates a trend reversal.

The oscillators are bottoming in support of short term dollar strength.

 

 

 

The longer term 12 month chart illustrates the potential turnaround occurred at the 38.4% Fibonacci retracement level, well short of other higher Fibonacci levels.

These are daily (short term) indicators and are supported by daily (short term) oscillators.

 

 

 

The longer term weekly 3 year chart does not indicate a potential turnaround but rather that the decline will extend further. If further declines do occur then it is more likely that the 61.8% Fibonacci retracement at about $91.00 in line with the Sep 2017 low will provide the turnaround.

This is supported by oscillators with further declines available, especially the MACD. What is more certain is eventual dollar strength which will form the beginning of the left side of the right shoulder of what could develop into a bullish inverted H&S formation which could propel the dollar much higher to $105.00 and beyond later on.

 

 

 

US Treasuries

Whilst it does appear that the US Treasury 10 year note countertrend rally is at an end with strong yield increases recently, a relief reversal is due. This is likely to occur soon with support close to both the blue horizontal at 3% and the blue diagonal below. This is likely to only be temporary with the main thrust to higher yields thereafter.

The Slow Stochastic is topping out and the MACD is starting to turn down.

 

 

The longer term 5 year chart illustrates the breakout through the top line of the triangle, plus the much earlier breakouts through all the H&S patterns. These breakouts supply thrust to the main trend of higher yields which are likely to target 5% and higher initially, as the long term bond bear market gains traction.

 

 

 

Gold

The gold multi-month rally has stalled in a sideways wedge, with a slight negative bias especially under the impact of the US rate hike yesterday. Gold is at a tipping point midway between key initial levels up and down, and although the recent increased buying interest in US miners has waned it is well to note that silver has begun to outperform gold recently.

The short term oscillators have a sideways drifting attitude.

 

 

The gold COTs data remains very positive, indicating gold strength.

 

 

The longer term 3 year weekly chart indicates the sideways wedge which could break up or down. This is a much more positive chart with the oscillators turning up in support of a breakout up. The gold rally still needs to become a reality however and if a breakout up does not occur then a break down will followed by lower prices down to test the $1125 level.

 

 

 

HUI / Gold Ratio

The earlier US miner jolt up against gold has retreated down to the bottom of the resistance zone, closing below 10-Dema. The rally has therefore stalled although the chart is still positive, but it needs to move up if it is to prevent a break down to test earlier lows.

The oscillators are turning negative which is not promising.

 

 

 

GDX US miners ETF

The GDX chart is of course similar to the Hui:Gold ratio chart and the same commentary applies. US miner investor optimism needs to be supported with higher gold prices.

 

 

DUST US Gold Miners Bear Index

The Dust chart displays virtually the exact opposite as the recent decline is offset with a price rise. although seemingly mild and still well within the resistance zone.

 

 

 

Silver

Silver has a confirmed bottom and has finally begun to slightly outperform gold. This is positive for precious metals and hopefully the position can be maintained: Silver underperformance during price declines versus silver outperformance during price advances. The silver COTs data is very positive, although the silver price reversed yesterday to close back into the support zone.

Hopefully, key initial levels can be tested on the upside while it is critical to hold the bottom support line at $14 otherwise much lower levels will be tested.

The oscillators still have more upside potential in support of hgher silver prices next.

 

 

 

The silver COTs data remains very positive, indicating silver strength. The continued convergence has in fact developed into opposite dilation, which is extremely positive for a strong rally soon.

 

 

 

USLV US Silver Miners Bull Index

The US silver miners USLV (bull index) still exhibits a strong negative bias but, like silver, is beginning to develop a consolidation at the bottom. In fact it has now a confirmed bottom, and the price drop yesterday is still above 10-Dema.

The oscillators are mixed and the chart does not look too negative.

 

 

Gold : Silver Ratio

The data has improved on last week’s improvement and a confirmed top is in place, also closing below 10-Dema at 83.27.

The Slow Stochastic is turning down but the MACD has further to drop in support of a diminishing ratio.

 

 

 

General Equities

The New York Stock Exchange continues in exhaustion mode with new lows continuing to exceed new highs as the Dow Jones continues slightly higher peaks driven by ever lower energy. The rising wedge pattern continues in this mode with interim and final collapse levels at 25 750 and 24 950.

The oscillators are dropping in support of further price declines.

 

 

 

The recent negative trend on the New York Stock Exchange of new lows continuing to exceed new highs extended to more than a month in closing yesterday by a margin of minus -51, as the market continues to be driven by ever lower energy.

New Highs against New Lows on the NYSE continues to illustrate the difference in the energy of the bull market leading up to the Jan 2018 peak (ave. 140) and the lethargy and lower energy levels of the countertrend rally in the bear market (ave. 25).

The index closed at -51 yesterday.

 

 

 

The fractured character of non-confirmations across all platforms in world equity markets continues as the interest rate in the US continues to increase with yet another rate hike yesterday while the US bond market continues it’s long term collapse as yields continue to rise. The interest rate cycle has turned up and is gathering momentum, and as basic economic theory dictates “as interest rates increase so asset values decrease”, so too will the equity markets also follow suit and bend to that basic economic law.

It is just a matter of time before equities collapse into a long term bear market.

 

 

 

 

 

 

Categories: Currency, Equity, Gold Tags:

Midweek Market 20 Sep 2018

Sep 20th, 2018 No comments

Executive summary

World equity markets continue in their fractured mode of non-confirmations across all platforms, while the US bond market resumes its collapse having ended the countertrend rally. With this as a background, the Dow Jones continues to edge up in exhaustion mode, being propelled by ever less counters as the new lows continue to outnumber the new highs on the US stock market. The interest rate cycle has turned up and is gathering momentum as the US yield curve in the bond market approaches ever closer to inversion which usually heralds recession or worse. Donald Trump continues to ignite trade wars with China, which is all very reminiscent of exactly this behaviour by the US administration in 1929 which then assisted in ushering in the great depression, and which now will probably do much the same by increased multiples of severity.

The US$ has resumed its decline in a multi-month correction which is, albeit slowly, propelling gold into its multi-month rally. US miners have extended their rally of last week and the whole sector worldwide seems ready to move up. This is however a countertrend rally which will falter as the dollar strengthens again in due course, pushing the precious metals complex down towards the ultimate bottom to the bear market which started in Aug 2011.

The Emerging market contagion has stalled for the time being although it will again ignite as the dollar strengthens again at the completion of current weakness.

 

US$

The US$ index gapped lower this week towards a new lower support zone, providing competing currencies and gold with the beginnings of countertrend rallies. The dollar closed below 10-Dema on 6 consecutive trading days and 10-Dema has crossed down below 50-Dema as momentum increases.

The oscillators are dropping suggesting further dollar weakness.

 

 

 

The longer term 12 month chart illustrates the decline potential, through the various levels of support towards the 61.8% Fibonacci retracement level at $91.57.

The oscillators are turning down in support of further weakness.

 

 

 

The even longer term weekly 3 year chart illustrates penetration of previous lows, but turning back from 50-Wema. The multi-month decline should test the target zone at 61.8% Fibonacci retracement at about $91.00 in line with the Sep 2017 low, with declining oscillators providing support.

The decline will form the beginning of the left side of the right shoulder of what could develop into a bullish inverted H&S formation which could propel the dollar much higher to $105.00 and beyond later on.

 

 

 

US Treasuries

Yield on US treasuries accelerated this week with the benchmark US Treasury 10 year note continuing to weaken as the yield increased strongly to 3.08%. The blue arrow is gaining in momentum more powerfully than the red arrow, and indications are that the US bond countertrend rally has ended.

The yield increase is approaching resistance at the blue horizontal and a relief reversal is due. The Slow Stochastic seems to be topping out although the MACD is rising strongly through a breakout of the rising wedge. This continued collapse in the US bond market is applying severe pressure on equities.

 

 

The longer term 5 year chart illustrates the breakout through the top line of the triangle, plus the much earlier breakouts through all the H&S patterns. The thrust towards higher yields is now underway, and this is likely to reach 5% as the first target followed by much higher yields in a long term bond bear market which has now resumed.

 

 

 

US Yield Curve

A long term 5 year view of the approaching inversion in the US ‘yield curve’ is illustrated in the chart below. It is evident that the trend to zero and beyond is now close at hand, and this is a powerful indication of the usual US recession or worse which is to follow. The last inversion occurred in 2006 – 2007 just before the Global Financial Crisis.

 

 

Gold

The gold price multi-month rally is underway, although still very fragile. The indications are positive with a weakening dollar, very positive COTs data, and investor extreme pessimism which is slowly turning towards optimism. Increased buying interest is becoming evident in the extended rallies that have started in the US miners GDX ETF (ensuing charts).

The underperformance of silver continues though and for the expected gold rally to continue the priorities are to at least hold the earlier bottom at $1168 and start penetration of key initial levels at $1218 and $1221.

The short term oscillators are turning up in support of higher prices.

 

 

The gold COT chart indicates the continuing tight convergence that is now likely to propel the gold rally, as it has done historically.

 

 

 

The longer term 3 year weekly chart illustrates the development of a consolidated bottom that ends in a positive Engulfing candle together with positive oscillators. This all illustrates the multi-month rally is underway.

 

 

 

HUI / Gold Ratio

US miner underperformance against gold was jolted up last week and this has developed into a confirmed bottom with 3 consecutive closes above 10-Dema. The bottom turnaround rally has extended up into the resistance zone and with positive oscillators looks likely to move up further as the gold rally continues.

 

 

 

GDX US miners ETF

The GDX chart is of course similar to the Hui:Gold ratio chart and the same commentary applies. US miner investors have started to develop buying interest after the near capitulation of the past 10 weeks. With a confirmed bottom after 3 consecutive closes above 10-Dema this is likely to continue up.

The oscillators are rising strongly in support of further US miner increases.

 

 

 

DUST US Gold Miners Bear Index

The Dust chart displays virtually the exact opposite in support of further US miner increases, as the commentary is exactly in accord with the inverse of the GDX chart. Once the gold trigger kicks in so too will this chart ignite downwards, and it provides an early warning system of what is likely to happen to gold and gold miners.

The top is confirmed and the oscillators are positive with a potential further drop to come.

 

 

 

Silver

Although silver still underperforms gold it is showing signs of an improvement. The silver COT data is very positive and although the bottom is still unconfirmed it closed above 10-Dema for the first time in 16 trading days. ilver closed at $14.28 which is just below the first key initial level at $14.40. Hopefully, to be followed by penetration of higher key initial levels at $14.78 and $14.97.

The oscillators are in support of higher prices next.

 

 

 

USLV US Silver Miners Bull Index

The US silver miners USLV (bull index) still exhibits a strong negative bias but, like silver, is beginning to develop a consolidation at the bottom although confirmation of a bottom has not occurred yet. However, it does look poised to move up now for the reasons indicated for silver, and it also closed above 10-Dema for the first time in 16 trading days.

The oscillators are in support of higher prices next.

 

 

 

Gold : Silver Ratio

The short term 6 month ratio illustrates the negative bias, closing at 84.61 which is a slight improvement on last week. But the consolidation at the top is still fragile and the top is unconfirmed.

The oscillators are continuing to turn down in support of a top which is promising.

 

 

 

General Equities

The Dow Jones continues to edge up in exhaustion mode, propelled by ever less counters as the new lows continue to outnumber the new highs on the US stock market. The rising wedge of the last 2 months continues to endure low energy peaks, with the critical support level at 24950. Penetration of this level will finally confirm the end of the countertrend rally.

 

 

 

New Highs against New Lows on the NYSE continues to illustrate the difference in the energy of the bull market leading up to the Jan 2018 peak and the lethargy and lower energy levels of the countertrend rally in the bear market.

During the bull market phase New Highs outstripped New Lows by an average of about 140 (blue dotted), whereas during the countertrend rally they were outstripped by an average of about 25 (red dotted). In other words, the bull market was powerful with high energy levels whilst the bear market rally is lethargic and low in energy. The difference in levels between blue and red is distinct and clear.

The index closed at -26 yesterday.

 

 

 

World equity markets continue in their fractured mode of non-confirmations across all platforms, while the US bond market resumes its collapse having ended the countertrend rally. With this as a background, the Dow Jones continues to edge up in exhaustion mode, against the interest rate cycle which has turned up and is gathering momentum as the US yield curve in the bond market approaches ever closer to inversion which usually heralds recession or worse. Donald Trump continues to ignite trade wars with China, which is all very reminiscent of exactly this behaviour by the US administration in 1929 which then assisted in ushering in the great depression, and which now will probably do much the same by increased multiples of severity.

It is just a matter of time before equities collapse into a long term bear market.

 

 

 

Categories: Currency, Equity, Gold Tags:

Midweek Market 13 Sep 2018

Sep 13th, 2018 No comments

Executive summary

Several markets are at crucial turning points including equities, bonds, and precious metals. World equity markets continue in their fractured mode of non-confirmations across all platforms, while the US bond market approaches inversion in the yield curve which usually heralds recession or worse. The US treasury countertrend rally is all but complete with new evidence that yields are going to continue rising which means the continued collapse of the bond market is about to resume. This will put immense pressure on the equity market which is at the tail end of its countertrend rally.

The US$ has resumed its decline in a multi-month correction which is, albeit slowly, propelling gold into its multi-month rally. US gold miners have sparked a rally after a long decline and the whole sector worldwide seems ready to move up.

The Emerging market contagion seems to have stalled for the time being although it could gain momentum again in the next period.

 

US$

The US$ index has resumed its daily decline after the recent relief rally, closing below 50-Dema once again. The oscillators are dropping suggesting further dollar weakness.

 

 

 

The longer term 12 month chart illustrates the decline potential, through the various levels of support in the consolidation zone, towards the 61.8% Fibonacci retracement level at $91.57.

The oscillators are turning down in support of further weakness.

 

 

The even longer term weekly 3 year chart ended on a bearish Engulfing candle as price re-entered the support zone. The overall decline should be multi-month towards the target decline zone at the 61.8% Fibonacci retracement target at about $91.00 in line with the Sep 2017 low.

The decline will form the beginning of the left side of the right shoulder of what could develop into a bullish inverted H&S formation which could propel the dollar much higher to $105.00 and beyond later on.

 

 

 

US Treasuries

The benchmark US Treasury 10 year note continued to weaken this week with yield increasing to 2.97%, with more indication now that the countertrend rally is very close to completion. The evidence continues to grow that the blue arrow is gaining in momentum more powerfully than the red arrow.

If the bottom blue diagonal line holds then the countertrend rally will be complete, and the US bond market will resume its collapse.

 

 

The longer term 5 year chart illustrates the breakout through the top line of the triangle, supporting the proposition of an end to the countertrend rally and resumption of the main trend towards higher yields.

 

 

 

US Yield Curve

One of the bond market indicators of economic health or otherwise in the US is inversion in the ‘yield curve’. This is derived by comparing the US Treasury yield in the 2 year and 10 year notes. When the 2 year yield increases above the yield on the 10 year it is said to ‘invert’, and this has usually heralded recession or worse. The trend towards inversion has been gathering momentum since the start of 2014 and is close to inversion. The last inversion occurred in 2006 – 2007 just before the Global Financial Crisis.

The yield curve will invert on the chart below when the graph reaches zero.

 

 

Gold

The gold price has a confirmed bottom and the multi-month rally is underway, although very fragile. The indications are positive with a weakening dollar, very positive COTs data, and investor pessimism at extreme levels. The increased buying interest that the market needs now came in the form of a strong bounce in the US miners GDX ETF on Tuesday, and hopefully this will manifest in breaking through the first initial level at $1221.

The underperformance of silver continues though and for the expected gold rally to continue the first priority is to at least hold the earlier bottom at $1168.

The short term oscillators are turning up in support of higher prices.

 

 

The gold COT chart indicates a continuing even tighter convergence that now continues at a narrowed point. This presupposes a successful gold rally, as has happened historically.

 

 

 

The longer term 3 year weekly chart illustrates a positive candle configuration since the bottom as well as positive oscillators.

 

 

 

HUI / Gold Ratio

US miner underperformance against gold was jolted up on Tuesday with a sharp revival in share prices, after a prolonged deterioration. This is only an early sign of a revival and the bottom in the ratio still needs to be confirmed.

The oscillators are turning up in support of further improvements in the ratio.

 

 

GDX US miners ETF

The GDX chart is of course similar to the Hui:Gold ratio chart and the same commentary applies. US miner investors have started to develop buying interest after the near capitulation of the past 10 weeks.

The oscillators are also beginning to look more positive.

 

 

DUST US Gold Miners Bear Index

The Dust chart displays a geared version of the inverse of the preceding charts and the same commentary applies, in reverse. Once the gold trigger kicks in so too will this chart ignite downwards. It provides an early warning system of what is likely to happen to gold and gold miners, but the sharp drop is only the beginning and a top still needs to be confirmed.

The oscillators are also beginning to look more positive with a potential drop to come.

 

 

Silver

The silver price continues to underperform gold although with a very slight reversal this week. Another consolidation is developing at the bottom but confirmation of a bottom has not occurred yet. Indications are improving with a weakening dollar, very positive COTs data, and investor pessimism at extreme levels. But, like gold, the market needs to develop stronger buying interest after the recent price devastation, and hopefully will manifest in finally developing a price bottom.

The oscillators are also looking more positive with a potential rise next.

 

 

 

USLV US Silver Miners Bull Index

The US silver miners USLV (bull index) still exhibits a strong negative bias but, like silver, is beginning to develop a consolidation at the bottom although confirmation of a bottom has not occurred yet

The oscillators are also looking more positive with a potential rise next.

 

 

Gold : Silver Ratio

The short term 6 month ratio illustrates the negative bias, closing at 84.72. But a fragile reversal is occurring at the top which has a way to go before confirmation of a top.

The oscillators are turning down in support of a top which is promising.

 

 

A long term view of the gold:silver ratio illustrates the dips at gold peaks in the green zone and the peaks at gold troughs in the purple zone. In accord with this it can be seen how the next gold peak will probably result in a ratio down at the 10 level while the next gold trough might result in a ratio up at 100 or slightly higher.

It places the current 84.72 in context.

 

 

 

General Equities

World equity markets continue in their fractured mode of non-confirmations across all platforms, and the Dow Jones in the US market continues to endure low-energy peaks as it nears the end of the countertrend rally. The rising wedge fracture is still inconclusive, but any break now will have to test the critical support at 24950 which will finally confirm completion of the countertrend rally.

The oscillators are mixed which indicates more sideways movement in the short term.

 

 

Two troublesome impact factors in the US equity market, in addition to the  fragmented nature of the market with all its non-confirmations and low energy levels, are in the bond market. The US bond market approaches inversion in the yield curve which usually heralds recession or worse, and the bond market itself is very close to completion of its countertrend rally.

Both these impacts will result in severe devastation of the equity market. The US treasury countertrend rally is very close to completion with new evidence that yields are going to continue rising which means the continued collapse of the bond market is about to resume. This will put immense pressure on the equity market which is at the tail end of its countertrend rally.

 

 

 

Categories: Currency, Equity, Gold Tags:

Midweek Market 6 Sep 2018

Sep 6th, 2018 No comments

Executive summary

World markets are fractured with a plethora of non-confirmations across all platforms. Most stock markets worldwide are declining while in the US the S+P500 and Nasdaq flirt with new highs while the main indices in the Dow Jones and NYSE are only in a countertrend rally, albeit in the late stage thereof. Euphoria and ‘flight to risk’ still abounds while the NYSE ‘Highs minus Lows’ measure ended at -6 yesterday, highlighting the major divergence between euphoria and reality.

The US$ has peaked and gold is starting a multi-month rally, despite the precious metals market enduring extreme pessimism at the moment with most indicators pointing towards further severe price drops. US bonds are in a long term bear market but at the moment enjoy a countertrend rally that is late in terminating.

Emerging market contagion has been driving recent dollar strength, and most world equity market weakness, and this could gain momentum in the next period.

 

US$

The US$ index has resumed its daily decline with an Harami candle after completing a relief countertrend reversal. It has once again declined back into the consolidation support zone (red), and looks set to continue its decline.

The oscillators are somewhat mixed.

 

 

 

The longer term 12 month chart illustrates the decline potential, through the various levels of support in the consolidation zone, towards the 61.8% Fibonacci retracement level at $91.57.

The oscillators are rising which indicates some hesitancy for quick weakness through the strong support zone.

 

 

 

The even longer term 3 year chart illustrates a more powerful motivation for weakness with the countertrend reversal ending on a bearish Shooting Star candle plus declining oscillators. The overall decline should be multi-month towards the target decline zone at the 61.8% Fibonacci retracement target at about $91.00 in line with the Sep 2017 low.

The decline will form the beginning of the left side of the right shoulder of what could develop into a bullish inverted H&S formation which could propel the dollar much higher to $105.00 and beyond later on.

 

 

The US$ index COTs data illustrates the widening gap between the Large Speculators and Commercial Speculators which typically indicates a weakening dollar.

 

 

US Treasuries

The benchmark US Treasury 10 year note continued to weaken this week with yield increasing to 2.90% although the countertrend rally is technically still in progress. The yield curve continues to increase with rising oscillators indicating this is likely to continue. However, the wave structure indicates otherwise, and direction therefore remains undecided between the closest red and blue horizontals.

The red horizontal line represents support and the blue line resistance. The main trend will resume once the horizontal blue resistance line is penetrated, after which the US bond market will resume its collapse.

 

 

 

The longer term 5 year chart illustrates the main trend rise still intact, also with penetration up through various H&S patterns. The indecision can be seen in the triangle (Black) representing the countertrend correction which is still in progress.

 

 

 

Gold

The gold price bottom has been confirmed and the multi-month rally is underway, although very fragile. The indications are positive with a weakening dollar, very positive COTs data, and investor pessimism at extreme levels. But the market needs to develop stronger buying interest after the recent price devastation, and hopefully this will manifest in breaking through initial levels at $1221 and later at $1240.

Many other indicators are very pessimistic, especially US miner price levels and underperformance together with silver. The short term oscillators are turning down despite the positive MACD breakout at the bottom of the chart.

 

 

The gold COT chart indicates a continuing even tighter convergence that has now narrowed to a single point. This typically precedes a price bottom as can be seen historically.

 

 

 

The longer term 3 year weekly chart illustrates more positive oscillators as well as a more positive weekly closing candle.

 

 

HUI / Gold Ratio

US miner underperformance against gold deteriorated further towards investor capitulation. The earlier development towards a price bottom in the ratio has been destroyed with a breakdown to a new low.

The oscillators are turning down and are probably near to bottoming, given the positive dollar/gold outlook.

 

 

GDX US miners ETF

The GDX chart is of course similar to the Hui:Gold ratio chart and the same commentary applies. US miner investors have near capitulated, and the earlier development towards a price bottom has been destroyed with a breakdown to a new low (red circle).

Once the gold trigger kicks in so too will GDX eventually ignite.

 

 

 

DUST US Gold Miners Bear Index

The Dust chart displays a geared version of the inverse of the preceding charts and the same commentary applies, in reverse. Once the gold trigger kicks in so too will this chart ignite downwards. It provides an early warning system of what is likely to happen to gold and gold miners.

The oscillators are rising again (negative for gold miners) although probably near to topping (positive for gold miners).

 

 

Silver

The silver price continues to increasingly underperform gold and in fact the position deteriorated further this week. The earlier development towards a price bottom has been destroyed with a breakdown to a new low. That situation needs to turn around urgently although indications are positive with a weakening dollar, very positive COTs data, and investor pessimism at extreme levels. But, like gold, the market needs to develop stronger buying interest after the recent price devastation, and hopefully will manifest in finally developing a price bottom.

The oscillators are turning down but are probably near to bottoming, given the positive dollar/gold outlook.

 

 

 

The silver COT chart indicates a continuing even tighter convergence that precedes a price bottom, and it presents a very positive picture of a strong rally next.

 

 

USLV US Silver Miners Bull Index

The US silver miners USLV (bull index) exhibits a strong negative bias having destroyed the earlier attempt at developing a price bottom. It has broken down to a new low with the oscillators also turning down. A rise into the resistance zone is the next priority.

 

 

Gold : Silver Ratio

The ratio has pushed up through the triple top to close at 85.09, generating additional bearishness. All appears to be ‘doom and gloom’ with this indicator pointing towards further precious metals weakness.

The oscillators are rising, adding to the gloom.

 

 

General Equities

World markets are fractured with a plethora of non-confirmations across all platforms. Most stock markets worldwide are declining while in the US the S+P500 and Nasdaq flirt with new highs while the main indices in the Dow Jones and NYSE are only in a countertrend rally, albeit in the late stage thereof. Euphoria and ‘flight to risk’ still abounds while the NYSE ‘Highs minus Lows’ measure ended at -6 yesterday, highlighting the major divergence between euphoria and reality.

The Dow Jones continues to endure low energy characteristics climbing to new low-level highs as it exhibits continued signs of exhaustion. The chart pattern indicates a potential fracture from the rising wedge. The first major support level is at 24950 and if breached decisively will confirm the end of the 5 month countertrend rally which, until then, is technically still in progress.

The oscillators are turning down in support.

 

 

 

One of the indicators pointing to exhaustion on the NYSE is the chart of New Highs against New Lows. It continues to illustrate the difference in the energy of the bull market leading up to the Jan 2018 peak and the lethargy and lower energy levels of the countertrend rally in the bear market. The chart below highlights the 6 months leading up to the Jan 2018 peak and the 5 since the start of the bear market countertrend rally.

During the bull market phase New Highs outstripped New Lows by an average of about 200 (blue dotted), whereas during the countertrend rally from Apr to now they were outstripped by an average of about 25 (red dotted). In other words, the bull market was powerful with high energy levels whilst the bear market rally is lethargic and low in energy. The difference in levels between blue and red is distinct and clear.

The index closed at -6 yesterday.

 

 

 

The rising wedge at the end of the countertrend rally presents a potential drop to signify an end to the 6 month rally. The fragmented nature of the US market with all its non-confirmations and low energy levels presents strong potential for the start of the next wave down.

The next key penetration point remains 24 950 below which lies a plethora of break points and the first strong support level.

 

 

 

 

Categories: Currency, Equity, Gold Tags: