Since my Sept 24 article on MarketWatch, "Believe it or not, gold miners are starting to glitter," the GDX has climbed to 15.64 from 14.27 (+9.6%). Traders anticipating the climb in the miners have done very well in our trade set-ups like Direxion Daily Gold Miners Index Bull 3X Shares (NUGT) and Freeport-McMoRan Inc. (FCX).
More so than at the time since my article, my technical work argues that the miners as well as the oil and gold commodities have established significant lows, and are bottoming ahead of a meaningful recovery period. Bear trap lows amid glaring positive momentum divergences in gold and oil, as well as in the CRB Index, are technically significant and alerting us to a possible watershed shift in market perceptions -- and shift in capital flows into the commodity sector from equities and perhaps from the bond market as well.
Spot gold has been carving out a 2 1/2 month basing area, which so far has left behind a bear-trap low. In addition, all of gold's action since July 2013 can be viewed as a falling wedge formation, which makes for a potentially powerful upside reversal.
Oil has turned up after breaking below its December 1998 support line at $46.80 and pressing to a multi-year low at $37.75 in the NYMEX futures. The plunge was not confirmed by my intermediate-term momentum gauge, and provided a glaring positive divergence, pointing to both a bear trap and a major momentum non-confirmation of the weakness.
As for the miners, they are participating meaningfully in the powerful SPY rally off its 9/29 low, but while the SPY continues to exhibit distribution top characteristics in the aftermath of a longer-term bull phase, the miners are emerging from a longer-term bear market and a nearer-term base pattern.
Watch for the GDX to hurdle and sustain above its prior rally peaks at 16.16 (and the GDXJ above 22.75) to begin to inflict some significant technical damage to their entrenched bear trends.
From a macro perspective, watch for the U.S. dollar to roll over into a period of weakness, fostered by a Federal Reserve reluctance - refusal -- to hike interest rates in the upcoming months. Yes, the Fed wants oil and gold prices, and commodity prices in general, to rise, in order to nudge higher inflationary expectations. And gauging from what the charts are saying, the markets will comply with Yellen's wishes.
In using any portion of MPTrader, you agree to the Terms and Conditions governing the use of the service as described in this disclaimer. Our disclaimers, policies and terms are subject to change without notice. MPTrader (www.mptrader.com) is published by AdviceTrade, Inc. and MJP Market Strategies, Inc., both of whom are publishers. The Web site is maintained by Codexia, LLC and has a marketing affiliation with The Technical Trader. None of these firms or individuals is registered as a broker-dealer or investment adviser either with the U.S. Securities and Exchange Commission or with any state securities authority. Mr. Paulenoff's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Paulenoff's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions and Mr. Paulenoff and employees of AdviceTrade do not have personal positions in instruments mentioned on the site. Hypothetical performance results do not include trading commissions and other execution costs that would be incurred if the trades referenced in the diary or elsewhere on the site were actual trades. Past performance is no guarantee of future results. MJP Market Strategies, AdviceTrade, and Codexia cannot and do not assess, verify or guarantee the suitability or profitability of any particular investment. The risk of loss in trading index futures can be substantial. You should therefore carefully consider whether such trading is suitablef or you in light of your financial condition. You bear responsibility for your own investment research and decisions and should seek the advice of a qualified securities professional before making any investment. As an express condition of using this service and anytime after ending the service, you agree not to hold any employees of MJP Market Strategies, AdviceTrade, or Codexia or the companies themselves liable for trading losses, lost profits or other damages resulting from your use of information in MPTrader in any form (Web-based, email-based, or downloadable software), and you agree to indemnify and hold MJP Market Strategies, AdviceTrade, and Codexia and their employees harmless from and against any and all claims, losses, liabilities, costs, and expenses (including but not limited to attorneys' fees) arising from your violation of this agreement. This paragraph is not intended to limit rights available to you or to us that may be available under the federal securities laws.
Recommended Content
Editors’ Picks
EUR/USD holds steady near 1.0650 amid risk reset
EUR/USD is holding onto its recovery mode near 1.0650 in European trading on Friday. A recovery in risk sentiment is helping the pair, as the safe-haven US Dollar pares gains. Earlier today, reports of an Israeli strike inside Iran spooked markets.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD is rebounding toward 1.2450 in early Europe on Friday, having tested 1.2400 after the UK Retail Sales volumes stagnated again in March, The pair recovers in tandem with risk sentiment, as traders take account of the likely Israel's missile strikes on Iran.
Gold: Middle East war fears spark fresh XAU/USD rally, will it sustain?
Gold price is trading close to $2,400 early Friday, reversing from a fresh five-day high reached at $2,418 earlier in the Asian session. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row.
Bitcoin Price Outlook: All eyes on BTC as CNN calls halving the ‘World Cup for Bitcoin’
Bitcoin price remains the focus of traders and investors ahead of the halving, which is an important event expected to kick off the next bull market. Amid conflicting forecasts from analysts, an international media site has lauded the halving and what it means for the industry.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.