Not cruising yet

A very positive development has happened in the gold market last week but we still need some more obstacles removed before we are firmly in the bull territory and can relax while on automatic pilot.


GLD - physical gold ETF
GLD recently bought the 35-39 index inside its true bull 92-96 buy signal. Also, it closed above the recent high at 164.96, therefore, broke into the bull zone with the first target at 174.00. There is no more danger of a double sell, all indices are in the right order and the picture is clearly bullish. 
The 174.00 level was a significant weekly high 4 times during 2011 and 2012, also, it is marking the upper boundary of the rising channel that GLD is currently in. For this reason, I am expecting some significant resistance around this price before the GLD is able to move on and attack the all-time high at 185.85.

Once the 174.00 is cleared I would expect acceleration into the new all-time high and then forming of a first multi-month high in this bull market. During 2005-2011 bull market there were three such highs and all of them were precisely marked with weekly ADX(14) over 45 and have been followed with corrections lasting between 3 and 6 months. Since the SKI is not ringing bells at the tops during bull markets I'll be watching for these indicators to signal the top.

Currently, the first line of support is around 164.00 and the second is around 158.00.

SLV - physical silver ETF

In my last blog, I said that SLV needs to overcome the short term resistance that originated at  01.06.20 to confirm its SKI bull 92-96 signal. It has done it so that is good. Also, I said that I would ignore the 92-96 sell signal as long as the price holds above the trend line that originates from the March low. That also has happened and the new 92-96 buy has been produced while the price held above the rising trend line.

The momentum is clearly up but there is still an unfinished job to do. There is a serious horizontal resistance between 17.50 and 18.00 before SLV can attempt at 19.71, the 2016 high. 

Once this resistance has been overcome silver should accelerate dramatically.

The first support for the next week is at 16.55 and the next level of support is at 15.89.

USERX - Gold and precious metals fund

USERX bull signal is on its 53d day and looking healthy. So far the average rise per day is about 0.5% but that should accelerate. Last week the price hit the upper boundary of the rising channel therefore, I would expect some consolidation in the week ahead. 

The next target is at 13.75, the support at 10.77

XGD Australian gold index

XGD is on an xxed out 92-96 buy, 62 days old averaging 0.33% per day.  Last week the price hit the new all-time high. The indices are aligned in the correct order. 

The target is around 9700.0, support at 8176.0.

HUI gold index
HUI broke out above the 2016 high and is in the bullish constellation. Target is at 372.74, the support 251.20. 

 

XAU 

XAU broke out above the 2016 high and the indices are in the bullish order. My initial target was at 140.94 and the price is very close to hitting this target. If exceded the next target is at 196.71. The support is at 122.03.

 

GDX

GDX broke out above the 2016 high and the indices are in the bullish order. My initial target was at 39.08 and had been hit last week. The next target is at 55.25. The support is at 34.78.

GDXJ

The last week GDXJ broke out above the 2016 high and the indices are in the bullish order. The next target is at 69.48. The support is at 46.88.

S and P 500

Two weeks ago I concluded that the SandP is in the no man's land but that the path of the least resistance seems to be up. So far it seems that my conclusion was correct because the SandP had been strong for two weeks and is about to buy the 92-96 echo. This signal will be xxed but, in my opinion, the momentum is still to the upside and I expect the price to keep heading towards the pre-crash highs. 

The weekly chart looks like a bullish flag with a minimum target at 3404.00 (September top ???) and solid support around 2900.00.

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. It seems that gold and SandP will be heading in the same direction for a while. 

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 24 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. 

Last 16-20 sell signal caused a nice drop, as expected, but it has transformed now into a 16-20 index buy signal that is on the path and not xxed. This signal should represent some strong support. If it fails it could mean more dollar trouble. 

TLT - bonds

TLT finally bought back the 35-39 inside the ongoing 92-96 buy signal. This means an acceleration to the upside should occur soon. 

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 my TIP/TLT analysis from two weeks ago I expect this to be challenged in the months ahead.

Bitcoin

After the most amazing recovery performed over the last four months, bitcoin has generated a strong, well set up, 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 by 2.39%. 

I am 100% long and trying to stay that way. I am expecting a week or two of consolidation in the gold market before the acceleration into the multi-month top. My stop loss now is a USERX 92-96 sell signal which shouldn't happen for months.

Good luck to everyone,

Branko