Friday, June 13, 2014

GOLD AND THE MINERS: charts for today

Some charts and opinions, heading into the weekend:

So GDX looks like it wants to take a breather. I dumped my HGU, half yesterday and half just now, as well as my Premier Gold, thinking things were overbought and it would be nice to take some profits.

Among other things, my favourite US & world ETFs are going ex-dividend next week and I want to buy back my positions - probably for cheaper than I sold them, if the DM equities keep backfilling for a while.

Looking at this chart this morning convinced me to do some selling: yesterday's GDXJ volume was highest in months, and it pushed GDXJ +3SD. That sort of move just begs to get sold into. It looks one hell of a lot like a completion.

The nice thing about the above chart is that GDXJ is still way above its old support at $35. That tells me you don't have to worry about GDXJ failing; this could perhaps be the start of a longer uptrend in the miners. Though I don't suspect it so much that I'm willing to hold a gold miners double-long or a +3SD junior through the weekend. After all, a backfill could still take it down to $36 without it being bearish.

So I've trimmed my positions down to just Rio Alto; I'm so far in the green on that one that I'm happy to hold through a bit of consolidation, especially since it's still fundamentally undervalued at $2. Oh and I still have a few short-date at-the-money warrants in this-and-that, just for excitement.

This chart will scare people who look at it - "oh, was all that gold price movement just an attempt to challenge its violated support?" GLD hasn't even filled the gap-down yet! So people won't want to hold miners through the weekend, especially since the dominant narrative is that gold only went up because of geopolitics.

But here's the key to reading the immediate future, I think:

SLV looks a lot better than GLD. It already retook its violated support. The two are supposed to correlate, so SLV above $18.50 means gold should retake its support as well, barring a collapse in silver. SLV isn't dropping like GLD and GDX are this morning, so that tells me this market still has a positive outlook in the medium-term. I'm just not interested in betting on this over the weekend.

As for the USA?

People are starting to buy downside protection again, and so the US market might still be consolidating for a while again. I'm happy that I caught much of the upmove from May's whining and sold the day after the top. I'd not be surprised for $VIX to come back down to its short-term EMA in the next couple days, then maybe fail upwards and spike +2-+3SD. At that point I'll assess the level of idiocy in the US financial media, with the intent of maybe buying back my US equities positions.

That is, I might, if the junior miners don't look more promising. Trading a three-month 5% gain in the S&P doesn't measure up to trading a one-week 20% gain in junior miners!

That's my opinion as of 10:30 AM. Note that this sort of market can change my mind in a heartbeat: it all depends on how silver, GDXJ, and VIX react intraday.

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