Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Market Election Year Cycles – What to Expect? - 4th Jun 20
Why Solar Stocks Are Rallying Against All Odds - 4th Jun 20
East Asia Will Be a Post-Pandemic Success - 4th Jun 20
Comparing Bitcoin to Other Market Sectors – Risk vs. Value - 4th Jun 20
Covid, Debt and Precious Metals - 3rd Jun 20
Gold-Silver Ratio And Correlation - 3rd Jun 20
The Corona Riots Begin, US Covid-19 Catastrophe Trend Analysis - 3rd Jun 20 -
Stock Market Short-term Top? - 3rd Jun 20
Deflation: Why the "Japanification" of the U.S. Looms Large - 3rd Jun 20
US Stock Market Sets Up Technical Patterns – Pay Attention - 3rd Jun 20
UK Corona Catastrophe Trend Analysis - 2nd Jun 20
US Real Estate Stats Show Big Wave Of Refinancing Is Coming - 2nd Jun 20
Let’s Make Sure This Crisis Doesn’t Go to Waste - 2nd Jun 20
Silver and Gold: Balancing More Than 100 Years Of Debt Abuse - 2nd Jun 20
The importance of effective website design in a business marketing strategy - 2nd Jun 20
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Gold and Silver Stocks Maintain Long-Term Support

Commodities / Gold & Silver Stocks Sep 23, 2011 - 06:39 AM GMT

By: Jordan_Roy_Byrne

Commodities

Best Financial Markets Analysis ArticleNow that we are past the Fed circus we can get back to reality. But what is reality? Is it inflation? Deflation? A repeat of 2008? What matters is the message of the markets and the correct interpretation of the message. With regards to the mining stocks we are seeing a stark contrast relative to the rest of the stock market. This positive divergence has been strengthening and remains well intact despite Thursday’s sudden Fed-induced selloff.


In the chart below we graph GDX (gold stocks) and SIL (silver stocks) at the top followed by the S&P 500, EEM (emerging markets), CRX (commodity stocks) and XLE (energy stocks). In each graph (but SIL) we show the 400-day moving average. The 50 and 200 day moving averages are important but in my opinion the 400-day moving average is the most important when dealing with the primary trend.

The 400-day moving average has been significant for each market as it easily distinguishes between bull and bear markets. Each market, with the exception of the precious metals stocks has broken its 400-day moving average. Equities, emerging market equities and commodity stocks are now in a cyclical bear market. This doesn’t mean these markets will fall another 20%. I think they’ve seen most of their downside. The key point is that these markets won’t make a new high anytime soon and will likely remain in a trading range over the next 12 months.

Meanwhile, despite Thursday’s drubbing, the gold and silver equities remain healthy from a long-term technical perspective. GDX would have to fall another 10% to test its 400-day moving average. SIL doesn’t have 400 days of history but its holding 6% above its 350-day moving average. Back in the summer of 2008, the mining stocks plunged through support alongside commodity stocks and emerging market stocks. Today we continue to see an entirely different picture.

The gold and silver stocks are right where they need to be, holding up well amid a summer swoon that likely ends next month. There may be some more downside for these shares but don’t expect a penetration of long-term support. These stocks have held up well for fundamental reasons. Metals prices are up significantly on all time frames while cost pressures are abating. That is a recipe for higher profits and higher share prices. As we near 2012, a peak in bonds and bottom in equities will send money flowing into the gold and silver stocks.

If you’d be interested in professional guidance then we invite you to learn more about our service.

Good Luck!

Jordan Roy-Byrne, CMT
Trendsman@Trendsman.com
Subscription Service

Trendsman” is an affiliate member of the Market Technicians Association (MTA) and is enrolled in their CMT Program, which certifies professionals in the field of technical analysis. He will be taking the final exam in Spring 07. Trendsman focuses on technical analysis but analyzes fundamentals and investor psychology in tandem with the charts. He credits his success to an immense love of the markets and an insatiable thirst for knowledge and profits.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Chad
23 Sep 11, 16:31
Silver

The COMEX spot price will become irrelevent as no one will sell at their ridiculously low "Spot" prices

http://www.moneyteachers.org/October+Silver+Futures.htm


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules