Wednesday, April 23, 2014

Looking For a Bottom In Precious Metals Shares

Firstly, the chart:


The chart above evidences four phases of the current precious metals cycle:

Phase 1 - both gold and miners are in an uptrend with miners going up more than gold - this was the strongest phase of the current cycle, which started in 2008

Phase 2 - again, gold and miners in an uptrend but miners loosing momentum (they appreciate in the same way as gold, not faster)

Phase 3 - gold is going up but miners are going down - miners are in a strong downtrend

Phase 4 - gold and miners are consolidating

Well, the most important thing is what is happening today:
  • both gold and miners are not going down - this a big plus for the goldbugs
  • there are trading days (as yesterday) when gold is a little bit down but miners are up - another plus
  • this a consolidation stage and the direction where the prices will go after that is a question mark.
Another plus for the goldbugs is that it seems that Big Money, since 26 March 2014, has started to accumulate miners shares (I will show the Big Money chart later).

Conclusion: the technical situation of the miners shares is presently much better than in 2012 and 2013 with the chances of breaking up from the ongoing consolidation stage slightly higher than the opposite.

Friday, April 18, 2014

U.S. Stock Market - No One Rings the Bell At the Top

In my February 14 post I was looking for a top in the Nasdaq 100 index. Let me remind you the updated chart:


History repeats but the pattern has changed. Since February 14 the index have gone up a little bit but then....gone down and today it stands about 3% lower than in February 14.

What next? Of course everything could happen but the chart below is a sort of a ringing bell:


The grey area behind the index is the chart of Chaikin Money Flow indicator. Without going into details, this indicator shows whether money goes into stocks or out of stocks. As the chart shows, ahead of any major correction the Money goes out of  stocks - the slope of the indicator is decreasing (green lines). Looking closely at the chart you can see that a major correction is probably on because, despite the top in stocks, the indicator is very close to zero! What is more - due to the extended divergence (which started in May 2013) this could even be the topping pattern of the whole bull run.
The bell is ringing something big.