Precious Metals have been moving lower and many of the previously mentioned signals were flashed / target areas have been reached. Therefore, given the recent volatility, it seems that you will find this Market Alert valuable, even though it is not a "clear buy signal."

I've decided to send out this alert because silver, HUI Index, GDX ETF are currently either in the target area for this downswing or trade very close to it. Please note the following facts:

- the HUI Index has just touched its 200-day moving average,

- the GDX ETF has just touched its 200-day moving average,

- USD Index touched its 200-day moving average,

- the SLV ETF is currently in the $15.5 - $16.5 target area, and it is in the "bottoming territory" according to the cyclical tendencies present on this market,

- the GDX ETF has move VERY close to the lower border of the declining trend channel and the price that stopped the decline in early October 2009,

- regular indicators (RSI, Stochastic) are about to flash buy signals for many parts of the PM market,

- our unique indicators (available in the Premium Charts section) have flashed buy/extreme signal

- the GDX:SPY ratio (used to measure outperformance of PM stocks relative to other stocks) has reached a strong support level

The above factors suggest that the bottom is very close or has been reached today. However, on the other hand, the USD Index did not reach its target for this rally (80 level), and one should not ignore the fact that the general stock market appears to be ready to plunge. Although the correlation between the general stock market and the precious metals market is NOT very high (we have numbers in the Correlation Matrix from our Tools section to prove it), we would like to see additional confirmations of the abovementioned tendency before clearly stating that there's nothing to worry about as far as the plunge in the general stock market is concerned.

Summing up, this is not a "crystal clear buy alert", but if you have a strong aversion of "missing the boat", you may want to enter the precious metals market with a part of your speculative holdings today, and wait for additional signals with the rest of the capital. We believe that the situation is not "symmetrical" in terms of the long/short positions on the PM market, which means that while it is not clear if one should go long here, it seems that having an open short position is no longer justified from the risk/reward perspective. In other words, if I had a short position in metals / PM stocks right now, I would close it. We may get lower from here, but shorting an asset that is in a strong long-term bull market is generally a very risky practice, and - in this case - it usually pays off to take the capital off the table, at the slightest signs of strength.

It currently seems that the next several days will provide us with critical details, and possibly a confirmation of the above comments (or they will be invalidated.) I will comment on the situation more thoroughly (and I'll explain what type of signals will confirm that the bottom is in) in the next Premium Update (scheduled for tomorrow).

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