The analogy between the recent market crash and the one from the year 2008 seems over. The initial crash was almost identical but the recovery had significant differences. In 2008 the recovery was weak and quickly followed by more selling pressure to test the lows. Today, the recovery took V shape, the price of gold and most of the gold indices are above the highs preceding the crash. The general market recovery is also much stronger and longer than in 2008 and the price of the S and P 500 had recovered 61.8% of the losses.
The gold market and the share market seem to trade in synch and this is a problem for me. We still haven't tested the recent lows and we haven't seen the decoupling between the two markets. Also, it is still not clear where the dollar is going and that is a crucial part of the big picture because the dollar will decide if we are entering a deflationary or inflationary period.
USERX
After the crash, the USERX price rallied then had a small correction and then shot up through the 16-20, without any meaningful resistance, all the way to buy the 92-96 and the 35-39 echo. This kind of behaviour characterises impulse waves but I still have issues with this chart. I explained them in my last post: need to break out of the recent high, 92-96 on the rise, 'end of the rally' configuration and need for decoupling from the GM. Most of these issues will be resolved if USERX manages to close above the 2016 high by the end of the upcoming week. Can it do it? Probably, if the GM holds for another week. The other and possibly more probable scenario is a sideways to down move to sell the 92-96 then buy the 16-20 and the 92-96 for the breakout and renewed bull market.
USERX weekly
From the weekly chart, we can see that if a more significant correction is about to start the target would be around 8.77-9.0.
GLD
GLD is in a bullish configuration and on the edge of giving a 16-20 buy signal. The short term configuration looks positive for another push up to try to clear the recent high at 164.42. When we look at the weekly however it seems to me that holding above the 164.00 is not very feasible at this stage. It is more likely that we stay bellow for another month or two. If we manage to break through and stay above then the next target would be around 174.00 (2012 high).
weekly
XGD - Australian gold index
I sold my gold shares on Thursday before the Easter holidays in an expectation that we will have a correction (I trade in Australia). In the week that started on 27th Apr we had the correction, the price of the Australian gold index went down to touch the 50 days MAV so I bought most of my trading positions back. Last week the price of XGD rallied back to where I sold and is now squeezed between the rising 16-20 echo and the down trend line that originated at Aug 2019 top. In my opinion, this chart shows much more unreleased energy than the USERX chart therefore has more potential to break out. A possible 16-20 index buy is decent protection against 92-96 sell as well as the 218-222 sell. In the case of a breakout, I would consider that the target is around 8700.00 (Aug 2019 peak). The Australian shares have underperformed during the last few months so I think that this target is achievable even if the gold price is going sideways for two months as it seems is probable.
HUI
HUI is in a bullish posture, all indexes are in the right order. The price is squeezed in between short term uptrend and the 2016 high resistance so technically it still hasn't broken out but it is very close to doing so. There is a lot of space for a correction without any damage to the overall bullish picture. Strong support lies around 220-230.
daily
XAU
XAU's chart is similar to the HUI's, it is bullish on all timeframes. The difference is that the XAU has already broken out and a correction or a sideways move would be quite desirable for a sustained bullish advance.
GDX
GDX's chart presents the same picture as the XAU, it is bullish on all timeframes. The price has broken out and a correction or a sideways move would be quite desirable for a sustained bullish advance.
GDXJ
GDXJ chart is similar to USERX. The price is on the double buy but still bellow the pre-crash top price and the 2016 top price. A correction would sell the 92-96 buy signal but would also set the stage for a true bull market buy. I prefer correction.
SLV
SLV is lagging at this stage and it has a lot of space to cover. It has bought the 35-39 and the 16-20 for a double buy which should help to overcome the major resistance represented by the 218-222 index. Currently, the 200 days MAV lays around 15.80 and that should be considered the immediate target. If the price turns down the support should be around 13-13.5.
S and P 500
SandP has recovered 61.8% of the losses incurred during the crash. Both 100 days MAV and 200 days MAV, as well as the 2019 and 2018 tops, are creating resistance at around 3000.0. So far the 218-222 index has been a firm resistance too and also at the same 3000.0 level. I think the S and P is rolling over and if it goes into a dive it will take the gold market with it at least initially. If in an unlikely event it manages to break through such a tough resistance the move towards the 92-96 resistance around 3200-3300 should be quite swift. Such an event would help gold to overcome the 1750 resistance and try to pass 1800 and beyond.
daily
TLT - Bonds
TLT is on a double buy since the end of January. This buy hasn't been threatened even during the crash. The after crash recovery has been stopped at the pre-crash high but last FRI price generated a new 16-20 buy which should mark the short term low and help to try a breakout from the symmetrical triangle which is restricting the advance at the moment.
UUP - Dollar
UUP has gone nowhere since Aug 2019. It is currently on a true bull signal which has also gone nowhere for 24 days since inception. The squeeze is becoming tighter and tighter and when this chart moves it should be very quick. I said before that I think that the answer to the inflation/deflation discussion lies in this chart. I am presenting the weekly chart too to illustrate that in the case of a breakout the long term target is 25% above the current level! I am seriously considering going long dollar for 8 to 12 months if the upcoming 35-39 sell buys back at 28.0 or higher.
UUP weekly - gigantic inverse HandS
Bitcoin
BTC has done everything needed to start turning the chart bullish. It has rallied 35% since it generated the 35-39 bull signal and now it needs just a little push to buy the 92-96 and completely turns the picture upside down. Bitcoin has been the best performing asset for the last 4 weeks. I had hoped that I could see something like this from the SLV but it didn't happen. Personally, I had not been involved with bitcoin in the past and in the last few months I am trying to figure it out but it evades me, I cannot understand it. It seems like it is moving in synch with the S and P recently and I suspect it could be susceptible to a downturn in the GM.
weekly
I am 100% long since Fri 1st May. I am not convinced that the breakout is the next move that we are going to see in the gold market so I will be a keen seller of my trading position at the next resistance. I manage these levels individually for each of my shares. My general stop loss level is still the USERX 218-222 sell. If the dollar breaks out I will consider taking a long position.
Good luck to all,
Branko
