The general stock market moved higher - above the previous highs but the breakout formed on low volume in both key stock market ETFs: DIA and SPY. Consequently, we remain skeptical about the strength of the stock market, especially that the True Seasonal patterns suggest a short-term decline any day now.

The Euro Index corrected 38.2% of the October - November decline, so the decline can - technically - continue, however it is not inevitable. We could see a move higher, to the 61.8% retracement, and still remain in a downtrend.

Gold moved higher yesterday and the volume for the GLD ETF was not tiny - it was above average, taking this month into account, and it was significant enough to convince us that the invalidation of the breakdown below the rising support line (based on June and October lows) was indeed meaningful. It does look like something that could trigger a temporary rally.

At this time the 38.2% Fibonacci retracement based on the October - November decline is at $1,300 and it seems that gold will correct (at least) to this level before moving down once again. It could move higher, to $1,323, where the 61.8% retracement is located.

Consequently, it seems that closing the speculative short positions and taking profits off the table is a good idea right now - we will aim to re-enter this position at higher prices and to further increase your profits.

Silver closed below the previous October lows (even when taking the intra-day lows into account). Moreover, the white metal not only confirmed the breakdown below the rising support line, but it also moved below the 61.8% Fibonacci retracement level based on the June-August rally ($20.80). This means that the upward correction might already be over. Then again, the breakdown below the 61.8% retracement has not been confirmed just yet, and if gold rallies and silver follows, then the breakdown will likely be invalidated and another short-term rally will follow.

Since the technical picture for silver remains bearish for the short term, we suggest closing the short position in this case as well, because silver might provide invalid technical signals if they are not confirmed by other markets (in this case - gold).

Mining stocks were basically flat yesterday, which doesn't have meaningful implications at this time.

All in all, we think that it's best to realize profits by closing the short position - it was opened when gold was trading at about $1,355 and it was doubled when gold was trading close to $1,319, and we are closing it with gold at $1,285.

To summarize:

Trading – PR: No positions.

Long-term investments: Half position in gold, silver, platinum and mining stocks. As far as long-term mining stock selection is concerned, we suggest using our tools before making purchases: the Golden StockPicker and the Silver StockPicker

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.

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