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Precious Metals & General Market Review

August 2014 – Issue #326.d 8-24-14

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“Back to Angels”

Gold was testing the $1278 Angel (jsmineset.com) last week and managed a weekly close over it. Gold and silver are under considerable bullion bank suppression, but August is waning as September approaches. Gold continues to hold the rising support line off the December 2013 low.

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What a messy chart. I may change it but left it that way for now. There is no bloody way that gold is amidst a C-Rise as the Aden Sisters say. I maintain that gold has yet to put in a decent A-Rise yet off the December low. There’s too much noise shorter term. Let’s move out in time…

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From this perspective (linear), one could handsomely argue that gold hasn’t even finished that bloody three year D-Decline yet. That would be a serious bummer. Gold has not been able to cross up thru that 14 month exponential moving average. Relative strength remains below 50. Overhead symmetrical triangle resistance lies across $1375. Gold continues to have a real tough time of it.

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Gold continues to consolidate inside a logarithmic symmetrical triangle. Logarithmic support comes in near $1220 this month, right around the June low. The MACD has yet to perform a bullish crossover but it’s close.

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This Adam Hamilton Zeal LLC model isn’t working well as it includes the 2011 parabolic rise in the 13 year average.

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This model appears closer this year. It suggests weakness in gold throughout the month of August. Perhaps the New Moon will be a positive influence next week.

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SLV is the only way we can see inside silver in this two hour chart, as unfortunately as a paper instrument is. There remain some more gaps into the June low to address or not address. A positive relative strength divergence hints that the pullback may end soon if it didn’t already on Friday.

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This silver round is available at Provident Metals thru Sunday at $19.77 plus shipping, for what it’s worth to you. http://www.providentmetals.com/morgan-dollar-1-oz-silver-round.html I can’t find any other silver supplier letting go of silver this low this weekend.

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Silver likes to test one’s patience. It hasn’t broken the support line and hasn’t taken out the June low and September is moments away. There’s a positive Money Flow divergence. Chaikin Money flow is seriously record negative. Personally, I like to buy into weakness but that’s something you’ll have to decide for yourself. I have thick calluses from catching falling knives in gold and silver. Goes with the turf.

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I ran an extension of support across the lows from late May into early June and prices, so far, held that support line last week. I have no idea what next week brings.

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Silver DOES sport a bullish MACD crossover so far this month, albeit barely in this monthly logarithmic chart and the month isn’t over yet. The trading month ends with next Friday’s close.

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Silver in relation to gold is oversold on the weekly chart and in a position where a potential reversal could occur any time. It’s actually a nice set-up. It’s high time for silver to make its move, but there’s no guarantee that it will.

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Silver Dragon is showing some action again. I picked up a chunk of this recently at $0.018. It’s having a challenge getting thru $0.05 but that may not be for too much longer. Got to know when to sell this, though. Don’t marry it.

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GLD filled that June gap last week. Allow me a bullish interpretation of pattern behavior, if you will for a moment. It’s got more work to accomplish before it can muster a run thru that 325 exponential moving average resistance above. I see a falling bull wedge inside a rising channel but $122 needs to hold.

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Despite weakness in gold’s weekly closing price, Chaikin Money Flow remains fairly positive. So far, gold hasn’t broken support but it is a bit nerve wracking here, end of summer, to see it so close to its rising support line.

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GDX has yet to break free of its consolidation. The GLD to GDX ratio has yet to break down. It would be bullish for the sector, even for physical gold and silver to see the gold stocks break out in relation to the physical metals. That has yet to happen. There are some really bearish prognostications out there for the sector…

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Take, for example, this chart from Chris Vermeulen’s latest essay: http://www.gold-eagle.com/article/gold-and-oil-verge-something-big-hero%E2%80%99s-rarely-win This chart zeroes in on the current consolidation and projects much lower gold prices. What it doesn’t take into consideration is the long term logarithmic support line.

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Gold can break Chris’s shorter term trend line and still be above long term weekly closing price support. I’m willing to give gold the seasonal benefit of doubt so long as that support line holds. If it doesn’t…well, we’ll have to cross that bridge if and when it gets there.

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I’m a subscriber of the Aden Forecast newsletter and have been so for years. Their work stands apart and, although I don’t always agree with every assessment, I wouldn’t buy the newsletter if I didn’t find way more value than its price. This chart’s from their latest public essay which will explain what they’re watching for the gold sector and they remain bullish so far: http://www.gold-eagle.com/article/big-picture-most-important Aden Forecast: https://adenforecast.com/

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The banking index bounced off support and the gold stocks retreated last week. This is an interesting inverse relationship, banks to gold stocks. The banks continue to win the battle of paper against metal.

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That’s why I remain, in other accounts, long the market and all-in invested. The models have kept me in the game. This model remains on a bull signal.

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The 13/34 exponential moving average model remains on a bull signal. The MACD is showing signs of wear and tear.

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I wouldn’t be surprised to see a post-Yellenomics Jackson Hole pullback. So long as SPX remains inside the channel, I don’t see a problem. We’ll keep watching these weekly.

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On the other hand, this chart worries me. It’s a megaphone top pattern.

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The stop suggestion is being raised this weekend to just under 1900. Naturally, that’s for you to decide.

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There’s a Gangsta Gapsta hanging loose down there around 1958 that I wouldn’t be surprised to see completely fill.

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Just know that a stop under 1900 might shake one out of a continuing bull market. This Thirdeyeopentrades model remains on a bull signal until such a time that the 10 month EMA crosses down thru the 12 month EMA. I ran into a young gentleman Saturday who confided in me that he had stopped his 401k contributions because he didn’t trust the fundamental picture. I have met others like him. Fortunately, there are other ways to grow wealth outside the stock market, and perhaps I’ll have an opportunity to sit with him and educate him on some alternatives. It’s of utmost importance that young folks save in some way for retirement. Our country sets a poor example these days. It overspends for political gain and punishes savers in the process. Capital has been misallocated for years. This market has been Fed driven with the printing press at full tilt. Our national debt is $17.6 trillion and nobody cares. It will never be paid off. Personally, though I can hardly stand the system, I can’t argue with a bull market and have remained fully invested for the past few years.

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The pound is significantly oversold in the short term. That’s good news for Americans planning a vacation to the English countryside as the dollar will buy a bit more poundage for the trip.

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The Pound may simply be back testing the breakout resistance line, but it was and remains overbought on the monthly chart.

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The Dodge & Cox Stock Fund is overbought but still riding its 100 day exponential moving average support line.

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A lot of folks exited this popular (unpopular) Pimco Total Return bond fund but it has spent 2014 recovering nicely. So far, it’s holding that rising channel on pullbacks.

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I like to watch this fund as it’s filled with small cap stocks. So far, I’m not concerned as long as the fund holds its 300 day exponential moving average. September and October like to usher in market pullbacks, so one must remain alert. There is potential for a head and shoulder top to form here, but it’s premature to expect one. If that is one forming, the neckline would be approximately positioned across the 300 day EMA. So, that seems a reasonable stop as a stop tighter would more than likely shake one out of further advancement potential. Here are Chuck Royce’s most recent thoughts: http://www.roycefunds.com/insights/2014/08/2014-market-so-far

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The Fidelity Growth Fund has been volatile this year and seems to require a more liberal stop underneath its 175 day exponential moving average. The next upside target is $134.

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So long as this American Funds Growth Fund holds its 150 day exponential moving average, it looks good. It’s overbought presently.

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Biotechs have regained their altitude following Janet Yellen’s June comments that the sector was over-speculated. Maybe she was short! What concerns me is that the rise off the April low is occurring on way less volume than the February-April sell off. Support is along the 65 week exponential moving average. This sector looks vulnerable to me approaching the vulnerable September-October period.

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Celgene has performed well as it moves toward the Thirdeyeopentrades price target. However, take note of the rising wedge pattern in the face of negative relative strength and MACD negative divergences. It’s probably prudent for one long this stock to have a stop under the rising 50 day exponential moving average.

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Copper has made upward progress off the March low and holding a rising support line.

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But copper is still struggling upon its break up thru that falling wedge. It looks good for copper if it can hold three bucks.

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The Yen’s getting destroyed. Is this what’s coming to the US Dollar as it loses its World Reserve Currency status? Oh, I know. There are many who would poo-poo such a statement. Gold responds favorably to a stronger Yen.

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The banking sector continues to perform well as it consolidates off the March high. I don’t understand the Stockcharts.com problem displaying volume. They may have switched providers.

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This triple leveraged bear vehicle is displaying a massive Chaikin Money Flow positive divergence. Technical support lines intersect near $24. That could be where to place a stop under for a leveraged hedge if one wanted some hedging against Sept-Oct downside risk.

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The Dow is a rising wedge in the spotlights of declining volume and a Coppock Curve rollover.

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That’s a megaphone topping pattern. The Federal Reserve has distorted the markets to the point where technical analysis becomes difficult. Summer’s nearing an end. The Boyz of Wall Street will return from their million dollar Long Island mansions soon. We’ll see what they think about current market prices once back in their trading saddles. With that, have a great week!

Thirdeyeopentrades wishes you Health, Wealth, Wisdom and Happiness!

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