GLD - physical gold ETF
GLD recently bought the 35-39 index and sold the 16-20 index inside its true bull 92-96 buy signal. That development satisfies the SKI requirements for a new leg up inside the bull market. The one thing missing, from the classical TA point of view, was a close above the 164.96. On Monday last week, the price did close above 164.96 and stayed above it for the whole week. We can now officially say that the GLD broke out, first target 174.00.
A temporary danger is a potential double sell 16-20 and 35-39 that can happen in the next 7 days if the price hits 162ish.
SLV - physical silver ETF
After an impressive rally from the bottom of the crash to buy 92-96 SLV made a classic buy sell move to set up a true bull buy. Last week it needed to hold above 16.54 for the buy to generate and it did. It closed the week at 16.63 and thus generated a true bull signal
When the classical TA is taken into consideration, unlike the GLD this breakout is still not confirmed. First, SLV needs to take out the short term downtrend that started on 01.06.20. Also, there is a considerable horizontal resistance between 17.50 and 18.00 which is clearly visible on the weekly chart. If all this is taken care of the next target would be the 2016 high at 19.71 but it is not gonna be easy.
For the next 10 days, there is also a potential for a 92-95 sell signal but I wouldn't be too concerned about it as long as the price stays above 16.50. The reason is that from the 07.07 the 92-96 index will be echoing the March 2020 crash and it will be easy to buy the index back as long as we do not go into another devastating crash.
If the silver price is going to make any progress in the next couple of months I expect it to be a tedious ebb and flow rather than a spectacular rise.
USERX - Gold and precious metals fund
From the three possible scenarios that I described the last week the second one (rise straight up through 16-20 sell signal to reach new highs for the year without interfering with 35-39 or 92-96 index), is unfolding for now. The interference with the 35-39 and the 92-96 is still possible but the window of opportunity will close by 20th July.
The danger in this period is a possible double or triple sell. The triple sell is rather low probability because it needs quite a precise action, not too far down in order to avoid a 16-20 buy and not too fast up, after the potential 92-96 sell, in order to sell 35-39 before the 92-96 buys back. Even if it happens it will need an immediate 12%+ drop to save the 92-96 sell from buying back. Much more realistic bearish scenario would be a strait crash a la March 2020, which I do not find very probable, but one never knows. Here is the chart picturing a possible triple sell.
The reason I do not consider the possibility of a serious crash lies in the weekly chart of the USERX which is looking like a clear breakout with plenty of room to rally. The next medium-term target is 13.75.
XGD Australian gold index
XGD recently broke out of the downtrend line that started at the Aug 2019 high. It is on an xxed out 92-96 buy and the action of the last few weeks seems like a textbook test of the breakout. 10 days ago a 16-20 buy has been generated to support the theses of the breakout test. The buy is working well, the price has advanced 5% since the execution day. The one problem that I have had with this chart was that it has been on 218-222 sell signal but that will be rectified soon if the price can hold above 8000.00.
HUI gold index
HUI broke out of 240.00 level to then reach and breach the 2016 top price and form a little high. The high formed in the shape of a small head and shoulders pattern and then sold the 35-39 index. This head and shoulders pattern can now be dismissed since the 35-39 bought back on Friday. Inside the 92-96 buy, this 35-39 buy usually marks breakouts but the price will need to clear 286.05 again to step into the free territory.
HUI broke out of 240.00 level to then reach and breach the 2016 top price and form a little high. The high formed in the shape of a small head and shoulders pattern and then sold the 35-39 index. This head and shoulders pattern can now be dismissed since the 35-39 bought back on Friday. Inside the 92-96 buy, this 35-39 buy usually marks breakouts but the price will need to clear 286.05 again to step into the free territory.
For the period of the next 10 days, a 35-39 sell will be possible but I wouldn't pay too much attention to it as long as the price stays above the uptrend line that started at the bottom of the March crash.
XAU
XAU bought back the 35-39 index and it looks poised to break free of 114.71 level which served as a price magnet for the last two months. The little head and shoulders pattern can be dismissed now but there is a possibility of a 35-39 sell in the next 10 days which I would tend to disregard as long as the price stays above the uptrend line.
GDX
Same as HUI and XAU, GDX bought back the 35-39 and looks like it is heading for a rally. The potential 35-39 sell should be ignored as long as the price holds above 34.00.
GDXJ
The same as USERX, GDXJ sold 16-20 index which should be a signal for the new rally. When it closes above 48.57 it will officially enter into the new bull territory.
S and P 500
The SandP recovery after the crash was impressive but for now, it has fallen short of buying back the 92-96 index. The ongoing consolidation will soon generate a 16-20 buy which could mark the short term low. The excessive bullishness is being replaced with some serious bearishness that can be found in many expert's writings of the last week. I find that quite bullish. When I look at the chart it looks like the price is in a no man's land, below the 92-96 but above the 218-222 index. The recent consolidation looks like testing the 218-222 breakout. The support around 2900.00 seems pretty strong. On the other side, the resistance around 3200 looks tough too
The SandP recovery after the crash was impressive but for now, it has fallen short of buying back the 92-96 index. The ongoing consolidation will soon generate a 16-20 buy which could mark the short term low. The excessive bullishness is being replaced with some serious bearishness that can be found in many expert's writings of the last week. I find that quite bullish. When I look at the chart it looks like the price is in a no man's land, below the 92-96 but above the 218-222 index. The recent consolidation looks like testing the 218-222 breakout. The support around 2900.00 seems pretty strong. On the other side, the resistance around 3200 looks tough too
To clarify the situation I usually go for the weekly chart to see the big picture and if I do that for the SandP it clearly seems as moving up is the path of the least resistance.
The weekly chart looks like a bullish flag with a minimum target of 3470.00 (September top ???) and solid support around 2900.00.
I stopped looking for a big correction and a new low that I have been expecting since the recovery started. I expect the SandP to hover between 2900.0 and 3200.0 for a while before the next move is revealed. If gold is right and we will see a rally in the gold stocks it is hard to imagine a hard drop in S and P at the same time.
UUP dollar
I believe that the answer to the inflation/deflation question lies in this chart. For the last 6 months, there were several times when I thought that we got the answer but every time the price broke up or down it was instantly reversed. Currently, UUP is on a 15 days old double 35-39 and 92-96 sell plus 218-222 sell which, in SKI books, is super bearish. The 92-96 sell and the 218-222 sell have happened on the same day which additionally aggravates the situation but so far this event only managed to mark an exact low. We will see what happens now. Normally the next 16-20 sell would be a shorting opportunity and it might happen in the next two days.
25.52 Is critical support and if broken could spell a serious crisis for the dollar.
TLT - bonds
TLT has been in a correction since the end of April. Currently, it is pushing against the downtrend and it needs to buy back the 35-39 echo to enter the blue sky territory. The action of the last few days feels like it is trying to break out.
TLT has been in a correction since the end of April. Currently, it is pushing against the downtrend and it needs to buy back the 35-39 echo to enter the blue sky territory. The action of the last few days feels like it is trying to break out.
In the context of TLT I would like to show the chart of U.S. TIPS bonds which are inflation-protected bonds.
TIP/TLT ratio is known for being a good indication of inflation expectations and beside the fact that the ratio is still in a bearish constellation, it is clear from the above two charts that in the last three months TIPS have made better progress and the chart has broken in the blue sky territory while the TLT is still struggling to break out. This indicates that there is a good chance that in the next few months TIP could be rising faster than TLT which would turn the inflation expectations bullish in the long term.
Inflation expectation
The inflation chart has made some progress over the last two months but there is still no evidence that inflation is dominating the current market because the 50 day MAV is still under the 200 days MAV. Deflation is still in control but based on the above TLT/TIP analysis this might change in the next few months.
The inflation chart has made some progress over the last two months but there is still no evidence that inflation is dominating the current market because the 50 day MAV is still under the 200 days MAV. Deflation is still in control but based on the above TLT/TIP analysis this might change in the next few months.
Bitcoin
After the most amazing recovery performed over the last four months, bitcoin has generated a strong, well constructed, true bull 92-96 signal. Currently, it has sold the 35-39 index and needs to buy it back to signal the start of the new leg up. Bitcoin seems very tightly related to the S and P 500. The weakness of this chart is that the 92-96 true bull is currently underwater at 3.14%.
I am 100% long trying to exercise 'sit tight' strategy. Waiting for some targets to be hit to lighten up again. My general stop loss is USERX 218-222 sell.
Good luck to everyone,
Branko
Good luck to everyone,
Branko
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