Oct 25, 2012

Story of the day, GDX.

As mentioned yesterday, GDX broke from it's descending triangle. I mentioned either the breakdown would follow through or it would be a bear trap. Well, GDX opened today with a gap up of 3%. I priced out options yesterday at 3:50pm and realized they were all selling at a deep discount. However, I did not have enough time to pull the trigger. Today all options appeared to be selling at a premium for current underlying levels. Notice how the day's candle returned to the the inside of the formation today. I'd also like to note, that it's typical for a false breakout in one direction to be followed by a large move in the other direction as a counter. Let's see if we get anymore follow through tomorrow.

$USD:

The dollar formed a swing high today. However, I want to note that after forming this swing high, it rallied into the close. This is typically a sign of strength. It may take a few more days for smart money to re-position itself and help finalize this high for the dollar.

Gold:

Gold also formed a swing low today by creating a higher low and a higher high. GLD did not appear on the BOW list today, but the two days before must have made an impact. Not only have we cleared any overbought sentiment in the indicators, but today we have an RSI trendline break to the upside. This could very well be our bottom. Descending triangles are reversal patterns and normally break current trends to begin a new one in the opposing direction.

Silver:

Lot of thing to note in silver. MACD and histogram are beginning to turn up. RSI has broken it's downtrend line. Price has found support at the 38.2% fibo level. We formed a swing low today with a higher low and higher high. The RSI low now matches the RSI low we had back in June with the $26 summer low. Even if the dollar causes us to have one more push down, the bottom is very near, if not already in.

Stocks - SPY:

Stock were fairly neutral today. Not much to comment on. I believe it is typical for metals to bottom before stocks do. This chart appears to me to still have some more downside.

Conclusion:

Neutral to Bullish in metals. We may very well have a bottom in. But as always, only time can confirm this. Hang on in the case the dollar makes a desperate push higher to be swiftly rejected. Neutral to Bearish on stocks. There's nothing showing me it's time for a turn just yet.