Basically not much changed on the market yesterday, so the points that we had made in yesterday's Market Alert remain up-to-date. Silver and mining stocks didn't catch up with gold yesterday - in fact silver underperformed visibly once again and it's underperforming today as well (at the moment of writing these words and taking today's pre-market price action into account).

There is one factor that we want to comment on today. The Gold Miners Bullish Percent Index is no longer at the 0 level, and indicators based on it (RSI, Williams %R) are no longer oversold. The latter suggests that the local bottom is already behind us and that we no longer have bullish indications here. We saw the former (the index at 0) only once since the index's inception at the beginning of 2008 and it was in late 2008 at the final bottom for the mining stocks. This means that the situation was and still is extremely oversold. However, it's been the case for a few weeks that the situation is very oversold from a technical point of view, so this index at 0 doesn't change much. If the HUI Index successfully breaks below the 260 level, we will very likely see an even more oversold situation shortly. All in all, we don't think that the situation in the Gold Miners Bullish Percent Index changes much at this point.

We will comment on silver's underperformance in tomorrow's Premium Update in greater detail, and i.a. we will compare the current underperformance to what we saw during and before major bottoms.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA