Danger!

Some interesting signals have been generated and it is important to direct our attention to the way they shape the big picture.

I urge everyone to go back and read the intro of my last blog to understand why I am sending this update in the middle of the week. Markets are interconnected and it is important to see the big picture.

The most important thing first, GLD

GLD

GLD generated the 35-39 sell signal to join all other indices that already have sold. The only thing holding this chart from falling quickly is the support line but that support is getting thinner and thinner. If gold breaks $1800 then, in my opinion, a quick $100 move down will ensue. Every time gold makes a move to break through the resistance, the resistance reasserts itself. $1860 seems like a much tougher obstacle than $1800. To buy back the 35-39 echo, which is necessary to flip the picture to bullish, gold needs an instant surge of 1.98%. That would be around $1880. In my opinion, given the signals, the chances of that are much less than breaking $1800.

Here is the one-hour gold chart. If the neckline on this chart breaks hold your hat.

UUP - dollar ETF

Since March 2020 dollar is officially in a bear constellation (sold 92-96). During this time it couldn't manage to break the downtrend line but now it is one day from buying the 35-39 index on the path, not xxed while breaking this resistance line. Combine that with the 35-39 sell signal across the gold sector and you get two pictures telling the same story. 

Here is a 1-hour chart of USD/EUR, which looks like a breakout from the 2 months long inverse head and shoulders. Pretty strong bullish alignment that already broke out.

Often to get a better perspective of one chart I go to the chart that represents the opposite asset. In the case of the UUP that would be the UDN, dollar bear ETF. That one sold the 35-39 today. Fits the overall picture.

So, it seems that dollar and gold are falling in line, what about bonds and broad markets.

TLT - bonds

I described last time how this chart is very bearish. A further decline will increase the bond yields which is then the pressure on the S and P 500. The SandP is ignoring this for now, but it seems that the gold is not. Probably, the perception is that the FED will intervene if necessary but for now the TLT chart keeps deteriorating. What if the assumption that the FED is going to intervene wrong. Maybe they will let it bleed first and then intervene? Is that what this chart is telling? I do not know but to stop this chart bleeding the intervention is necessary and quickly. 

The mirror view of this chart is TBT bonds bear ETF. It has been on a true bull signal since Oct 2020! That should not be ignored.

S and P 500

SandP rallied the last two days but it didn't generate any signals, therefore, the SKI configuration is still bullish. This chart might be the last chance for gold and dollar to reverse their signals but I think it will need the SandP price to hit a convincing new all-time high to have such an impact.  The momentum is slowly waning. 

To shed more light to this situation lets involve the transport index. Transport index has generated its unwanted double sell index and is now trying to recover but for now, the sell signal is surviving.

Given the bonds situation, the SandP chart and the TRAN chart I would say that the overall bias for the broad markets would be slightly negative for now. Outside intervention is needed to push this thing upward again. 

That is it for now. Time is quickly running out for gold and gold stocks to reverse the action of the last two days. The charts are, for now, favouring the downside.

I am sitting on my core position and will establish a trading position if the charts generate buy signals. I have transferred all my ETF holdings to physical metal. I have established a small long position in the dollar (USD/EUR) and will increase it next week if the signals are not reversed. 

Good luck everyone,

Branko