We sent out the pre-Holiday Market Alert late in the session and after a daily upswing on the precious metals market and taking another look at the situation it seems that the decision to open speculative short positions in gold and mining stocks and the rest of what we wrote in it, is up-to-date also today.
We were expecting to see a small corrective upswing in gold that wasn't likely to invalidate the breakdown below the long-term rising resistance line - and that's what we saw in the past several days. Mining stocks moved most visibly higher, but they didn't invalidate their key breakdowns, so the move didn't change much, if anything. There was no invalidation in case of silver either. The white metal remains below the rising, long-term support/resistance lines.
Interestingly, copper moved once again to the previously broken neck level of the massive head-and-shoulders pattern (2009-2013) without moving even temporarily above it. That's just another verification of a breakdown, which does not change anything on it - the outlook remains bearish. This is a bearish indication for the entire commodities sector and the precious metals sector as well.
The volume on the GDXJ ETF (proxy for the junior mining stocks was huge relative to the volume on the general stock market (SPY ETF) and the last 2 times that we saw a spike in the ratio of these volumes, we saw local tops on the precious metals sector.
To summarize:
Trading – PR: Short position (half): gold and mining stocks.
Long-term investments: No positions.
Stop-loss orders for the speculative short position:
- Gold: $1,240
- GDX ETF: $22.20 (we have increased this level)
Profit-take level (close both positions - in gold and mining stocks) and take money off the table at this level):
- Gold: $1,160
The situation is too unclear to say how low will miners go when gold moves to $1,160, so we're focusing on the yellow metal in case of both markets.
As always, we'll keep you - our subscribers - updated should our views on the market change. We will continue to send out Market Alerts on a daily basis (except when Premium Updates are posted) and we will send additional Market Alerts whenever appropriate.
The trading position presented above is the netted version of positions based on subjective signals from your Editor, and the automated tools (SP Indicators and the upcoming self-similarity-based tool). You will find more information by following links in the summary of the latest Premium Update.
As a reminder, Market Alerts are posted before or on each trading day (we usually post them before the opening bell, but we don't promise doing that each day). If there's anything urgent, we will send you an additional small alert before posting the main one.
Thank you.
Sincerely,
Przemyslaw Radomski, CFA
