Monday 12 March 2012

Dull Monday...come back tomorrow

Boring day, with a few minor issues worthy of note...

Commodity equity index -at critical level

I've already highlighted the CRX a few times since I started posting just 3 weeks ago. I remain surprised just how weak this index is, considering the underlying inflationary issues out there.

CRX is likely forming either a baby bull flag..and will break upward in the next few weeks, or we are about to see a significant snap lower. If its the latter of course, that would make things kinda exciting in bear land. For the moment though, we're just drifting along. The underlying upward momentum that we've seen since last October is weakening though.

SP' near term - Fib levels

Just like the CRX, the SP' is at important moment, either we are going to start putting in new highs - in which case 1400+ would occur real soon, or we'll break the 1340 low from last week. Right now, even 1300 seems a difficult target to hit.

IWM - bullish outlook

Even if we can somehow move as low at 76, that looks to be about it. As stated over a week ago, only IWM below 73 would be supportive of a larger bearish outlook. 72 just looks too far away to attain. We have April Q1 earnings season fast approaching, and before traders realise it, if the numbers are coming in the least bit 'reasonable', then this market will likely keep melting up on ZERO buyers.

It is just a wave 4' then?

I get the feeling all of this recent nonsense is just part of a minor wave'4 - something that many others out there were also suggesting. If that's the case, IWM - 'best bear case' will hit maybe 77/75 within a week or two, and then up we go into late April/May.

For the moment, I remain short via IWM, looking for an exit at equivalent of Sp'1325 or so within 3-7 trading days.

More later maybe....(especially, regarding today's action in the VIX)

Heresy, for the Precious Metal Bugs!

I am more bullish than just about any of the most rabid precious metal bugs out there. Gold and Silver have had a great run for over a decade. They have excelled just about every other asset class out there. The Bernanke - along with all his comrades in the other central banks have done their part to devalue the paper, and inadvertantly given the precious metals a significantly larger public following.

Yet... the metals are still in trouble

Such a comment is indeed heresy as viewed from the typical pro-metal website/blog. Everyone should just 'buy buy buy' as much gold/silver as possible immediately! Yeah, well, buying silver since April 2011 has not exactly been the most profitable trade for the past year.

Lets take a look at the last 5 years, and a glimpse into the next 2 years.

*I use SLV/GLD when referencing Silver/Gold, it makes little difference overall, the price changes are the same, and both of those ETFs are heavily traded anyway.

1. Silver, the more dynamic and wild.

Silver remains in a broad up trend, although near term, we are still heading down. Yes, we've come up considerably since last Novembers low of $26, but again SLV is failing at the 10MA.

Unless Silver breaches the next key psy' level of $40, Silver is without question, still weak.

2012 best guess: $20
Low end target would be...$15/17

2. Gold, the boring and more stable one ;)

The Gold chart looks very much like Silver - although certainly more stable, and stronger. So far the pullbacks have been pretty moderate - except for the recent $95 single day fall.

2012 best guess: $1200/1300
Low end target remains: $1000 - although this seems almost impossible considering the continuing and periodic QE from the central banks.

A summer of bitching and whining ahead?

Last spring the metal fanatics were ready to celebrate, only to get one of the ultimate commodity smack downs. Whether you believe that's the result of the infamous meddling morgue', or just 'market forces', it really is irrelevant. What matters is that despite the hysteria - just as the main market indexes were maxed out in first week of May, the metals were beginning a severe decline.

Of course, rather than $49, Silver is starting from a mere 33. Downside into the low 20s is really not unthinkable.

What is the amount of rage, horror, and sheer disgusts that the pro-metal community will be venting this summer and possibly into the autumn - if the above outlooks are broadly correct.

Ironically, as is often the case, it will be when some of the very best pro-metal message board posters go 'radio silent', this will be the best buy signal we'll ever be given.

  a fan of the precious metals, but patiently waiting