Of course the big story is the move in the Dollar. It's continued to rally pushing other assets down. I believe this rally is very short lived now and will show us a quick reversal very very soon. It's right up against the 50 DMA. It has already stretched well above the 200 DMA. We have seen a "death cross" of the 200 DMA over the 50 which has always signaled a 3 year low. We have a very large HnS formation which is tremendously bearish and we're right up against a long term point of resistance that has always been respected. Could the dollar paint a more bearish picture?
Silver showed us something very important today. One of the tools we use to call bottoms is called a swing low. This is where the last candle prints the lowest low and the following candle makes a higher high off of that bottom. With last Friday's HUGE red candle, it would have been very hard to create a swing low. Today, however, we created a lower low and then rallied out of the bottom. This enables us to have to go a shorter distance in order to make a higher high. Today is day 28 of the silver daily cycle.
The same scenario also played out for Gold today.
Here's a look at the Silver ETF, SLV.
GDX and the Gold Miners are about to blast off. This is a fairly large Bull Flag. I'm looking at a target of $62-$66 going into the early New Year. Also notice the MA cross.. a major sign of a longer term bull. There's also a possible iHnS in play here which I did not outline on the chart. The left shoulder would be Dec 2011, head on May 2012, and we are currently forming the right shoulder. More downside is possible as we look for steady support which may possible come in at the 200 DMA. A bounce off of this along with a weekly candle swing long will make me a buyer again. I'm already long, and have suffered through this drawdown, so I will force myself to await confirmation. I do not need to add any additional risk to the portfolio.
Stocks didn't do much today either. But what I feel that is important is that they're hanging in space. They're not up against any significant support, fibo levels, MAs or anything else. The indicators are far from bottoming out and clearing out any overbought status as well. This price is going to move and tomorrow is likely a good day to watch out for it after taking a nice breather today. Once support is found, we're likely to launch out fairly quick. Then again, with the election tomorrow we could see price go either way.. in a big way. No way I would trade this market this week.
In conclusion, I am neutral on today's action. Nothing of significance has happened. Friday was brutal, so today was a good day for a breather. More downside is definitely possible in metals as one more good push would most definitely clear out the tremendous amount of small specs in the market by stopping them out under key technical levels. We have to be patient and remember not to be greedy. As the old saying goes.. Bulls make money, Bears make money, and the pigs always get slaughtered.
It's a Bull Market, afterall..
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