The tape was pretty uncertain yesterday and the flush at the close fixed 15min sell signals on RUT and NDX that had me very much wondering whether the rally had already topped out. Happily that wasn’t the case and both SPX and ES are now close to a test of the ideal rally target at the daily middle band, currently at 2072.5 on ES and 2079 on SPX. That doesn’t need to be tested exactly, the current AM high at 2075 at the time of writing would do just fine.
I would draw your attention to the possible IHS that has formed and broken up on the ES chart below. That’s still very much the lower probability option in my view, but it is very much still an option, and if the daily middle band fails to hold as resistance here then that would become the higher probability option, though the opening setup here strongly favors the bears in my view. ES Jun 60min chart:
I’m in such a quandary about precious metals. On the other hand, SLV and GLD look fantastic long-term (and most of you have seen my silver chart, whose target seems completely plausible now, whereas a week ago it was just plain dumb). But, I gotta tell ya, looking at this gold/silver sector chart, the run-up in gold (tinted in cyan) seems like it could really use a breather!
What I’m focused on are those Fibonacci retracement levels, the most pertinent of which is highlighted above in green. We actually are pushing above it right now, but sheesh, it sure would feel better piling into gold if things would relax a little bit! The good news is that gold and silver seem to be giving a long-needed F.U. to the central bankers out there.
Since Monday, hmmm were there any secret meetings that day…. The Yen has been falling. I laid out a fib retrace and am expecting the Yen to hold support at the 50% line. This is the new fuel for the rocket ship we call our stock market. This is also causing the precious metals some grief (why I bought DUST), and oil to some extent, as well. My belief is the Yen will renew its climb when our Fed does nothing in April, and no way in June with Brexit vote, on tap. In the meantime keep your NUGT’s warm.
The gold/silver sector has had an amazing 2016, having more than doubled in the span of about three months. I shorted GDX yesterday, however, recognizing how close it was to major Fibonacci resistance (see tinted green below). I think, long term, precious metals could still have a terrific future, but at the moment, some of the air has to come out of these tires.
To borrow a line from George Lucas, the Bears have a “New Hope” as the debut of the 7th Star Wars movie nears its worldwide debut.
Should the /ES (on the continuous chart) break and close beneath its November 16th low at 1998.50 on the daily chart, that price action portends a stronger move lower.
From a Fibonacci perspective the 38.2% retrace from the Nov. 3rd high to the Nov. 16th low, and following failure to retest that lower swing high before rolling over, sets us up for one of two potential patterns:
#1 – The Bat pattern (cue Adam West!) (more…)