The CPI, core CPI and initial jobless claims data is here, and the markets are reacting. More precisely, they are doing what you knew they would be doing based on chart analysis. Technicals precede fundamentals and you read about the former in my previous analyses - you were prepared.
Today, the USD Index moved decisively above its declining resistance line (which is a really important breakout), and the stock market (S&P 500, NASDAQ) once again failed to move to new all-time highs. That was the third time. Earlier today, I wrote how palladium declined significantly after its third failed attempt to move to new highs… A big decline is likely in the card for stocks as well.
So far, the S&P 500 is down by just 0.9%, and gold futures are down by 0.4%, but those moves were enough to trigger breakdowns in GDX and GDXJ. The latter is down by about 2.5% while silver is down by about 1.7%.
This breakdown is a major bearish development, and it’s not the end of the decline, but rather it’s early part. All bearish factors of medium-term significance remain intact, and today’s breakdowns simply confirm them. They tell us that the short-term barrier is gone, so they can now freely fall further.
These are good times for our trading positions, and the future looks even brighter. While Anna made great calls regarding individual mining stocks and copper recently and Paul took profits from his long position in stocks, I continue to think that the biggest opportunity lies in the junior mining stocks’ decline. Some might want to diversify and take trades in other markets as well, though.
Congratulations on your patience – it’s likely to be VERY well rewarded.
As always, we’ll keep you - our subscribers - informed.
Thank you.
Sincerely,
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief
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