Gold & Commodities

The Gold & Commodities category is a sub-section of General Market Analysis that includes charts and commentary associated with precious & industrial metals such as gold, silver, and copper as well as various commodities such as oil, gas, wheat, corn, etc…

Sep 022014

Both GLD (Gold ETF) and SLV (Silver ETF) experienced relatively large gaps below support today which can only be viewed as near-term bearish technical events. GLD has made a solid gap below the large symmetrical triangle pattern that was recently pointed out on the 4-hour time frame which is unarguably bearish price action. One potential bullish development is the fact that significant rallies have started when GLD from similar oversold levels (see the yellow annotations on RSI below). Next key support lies around 119.50.

Along with the symmetrical triangle pattern on GLD, I had also pointed out this bullish falling wedge pattern on the 60 minute chart of SLV, which prices broke above last week. Today’s gap down in SLV sent prices back well within the wedge pattern which makes last week’s breakout a “fakeout” or failed breakout. Failed breakouts are also clearly bearish technical events that are often followed up with additional selling. However, it is certainly worth noting that SLV still has bullish divergences in place on both the MACD & RSI (on the same 60 minute time frame previously shown). Therefore, it could be argued that we have some “glass half-empty or half-full?”, bearish vs. bullish cross-currents in the near-term technicals for both gold & silver.

For now the longer-term outlook on both remains bullish but both gold & silver are not far from very critical long-term support levels which, if broken, would certainly dampen the case that a new bull market in gold & silver is underway. My plan regarding the exposure that I recently added back to the mining sector is to sit tight on my positions for now and watch to see if GLD & SLV follow through to the downside following today’s bearish price action or not. Keep in mind these are only intraday charts although the 4-hour symmetrical triangle on GLD is also on the daily time frame.

Aug 292014

NEM (Newmont Mining Corp) is starting to move above this recent basing pattern (shaded area), which bodes well for the longer-term bullish case. Also note that I have added a new final target, T5 at 33.90. This new final target lies slightly below the large gap & horizontal resistance level on this 10-year weekly chart.     click here to view the live, annotated daily chart of NEM


Aug 282014

GFI (Gold Fields Ltd) was one of my top picks covered in the July 30th Gold & Gold Mining Sector video.  At the time, had pointed out the nice basing pattern that GFI had formed with the next buy signal to come on a break above the 4.38-4.40 resistance level, which GDI has clearly taken out this week. This gold mining stock has shown some nice relative strength lately having gained 16% since that video was posted less than a month ago while the gold mining sector (GDX) has just chopped around since then and is currently trading slightly below its July 30th close.

GFI was added as a Long-Term Trade setup when the video was published and following the breakout above the 4.40 resistance level, is now considered an Active Long-term Trade. However, despite the recent bullish price action in GFI, I did want to point out that GFI is now approaching a key long-term resistance level that comes in around the 4.70 area as shown on the weekly chart below. Any solid weekly close above that level will trigger the next long-term buy signal for an entry or add-on to an existing position in GFI. Of course, as always, it is imperative to manage your positions in the individual mining stocks along with the charts of both gold ($GOLD/GLD) & the gold mining sector ($HUI/GDX) as the success or failure of these trades, especially when positioning as long-term swing or trend trades, will largely depend on where gold prices are heading.

Bottom line: Although some gold & silver stocks have outperformed the mining sector and may trigger buy signals as they break out of bullish chart patterns or above key downtrend lines or resistance levels, gold & silver, although still looking bullish from a longer-term perspective, remain in somewhat precarious technical positions at this time and still have some work to do in the near-term in order to help solidify the case that a new bull market is underway. Therefore, make sure to use stops and position sizing commensurate with your own trading style & risk tolerance when trading the miners along with proper diversification, particularly if trading individual names vs. the diversified mining ETFs such as GDX, GDXJ, & SIL.

Aug 262014

So far, GLD is playing out as expected after moving lower to tag the bottom of the 4-hour triangle pattern followed by a reversal (so far) though there is still a lot of work to be done to strengthen the bullish case, namely a break above the triangle pattern. However, a move below Thursday’s low of 122.45 would certainly dampen the near-term bullish outlook for GLD. Previous & updated 4-hour charts of GLD below:

SLV broke gapped above the 60 minute downtrend line today & is currently backtesting from above. My preferred scenario has prices moving higher but the 18.50 level remains key support, should this breakout fail. Previous & updated 60 minute charts of SLV below:

Aug 252014

GLD is currently at the bottom of the trading range defined by the white shaded box. An upside break of the range (still favored) would be bullish while a downside break (certainly a possibility) would likely bring GLD to the 119.50ish support area. GDX is also sitting near the bottom of its respective trading range and will almost certainly follow the lead of GLD with an upside (favored) or downside resolution from the recent trading range.

Regarding the broad markets, I still think that we’ll probably only see marginal new highs before a meaningful reversal but as recently mentioned, I do not plan to add any more short exposure until we see some decent evidence of a reversal soon (e.g.- a bearish engulfing candlestick or some other type of semi-reliable technical evidence of a reversal). A good start would be to see the SPY close below Friday’s low of 198.74 sometime this week, especially if that were to happen later today (i.e.- a complete backfill on today’s gap & then some). My preference is to keep things light & avoid adding any new exposure, long or short, to all but the best looking breakouts or chart patterns at this time.

Aug 222014
SLV 60 minute Aug 22nd

SLV 60 minute Aug 22nd

With SLV (Silver ETF) having pulled back to nearly the 78.6% Fibonacci retracement level, a break above this bullish falling wedge/contracting channel would likely signal the end of the near-term downtrend in silver prices. The white horizontal lines mark a few of the near-term targets.

Should prices continue much lower, SLV may test the critical 17.75ish support level that marks the mid-2013 & mid-2014 double bottom lows. Any break & sustained move below that level would have longer-term bearish implications for SLV. By sustained, I am referring to anything other than a relatively brief & shallow break below that support level which could serve as a bear-trap/flush-out move assuming prices were to regain the 17.75ish level shortly afterwards (a bullish event).

As of now, I favor a reversal in both GLD & SLV from at or near current levels but remain open to all possibilities as the precious metals are in a somewhat precarious technical position at this time.

Aug 212014
GLD 4 hour Aug 21st

GLD 4 hour Aug 21st

GLD (Gold ETF) has been consolidating within this large symmetrical triangle & is poised to gap towards the bottom of the pattern (along with horizontal support) today. A daily close below the triangle might open the door for a test of the mid & late 2013 lows in GLD. If this intersecting horizontal + trendline support level around the 122.80-123 area is taken out (a daily close below), the next decent support level before a test of the mid & late 2013 lows comes in around 119.40. I favor a bounce off the 123 level but will not be adding any more exposure to gold or the mining sector should prices move below the triangle pattern.