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US Dollar At A Pivotal Point

I am pretty sure that the gold bugs are totally depressed now. Since May 2018 gold and silver have been in their short-term downward trends and, despite extreme pessimism among North American speculators trading gold and silver futures, it looks like the precious metals market is doomed.

However, wait a moment and  look at this chart:

source: Stockcharts.com

Well, I hate classic technical analysis indicators as, for example, the MACD (Moving Average Convergence / Divergence) indicator (the lower panel of the chart) but sometimes these indicators work quite well (and, please, do not ask my why - I have no idea).  

In the case of MACD  - note that in the beginning of 2017 it delivered a SELL signal for the US dollar index (the red circle). Shortly after the US dollar started a long-term downward trend.

Interestingly, these days MACD is very close to generate a SELL signal once again (the blue circle). If that is the case, the precious metals market (very often going in the opposite direction to the US dollar) could start a new leg up that nobody expects. 

Summarizing - it looks like the US dollar is at its pivotal point now. From the technical point of view it should renew its upward trend very soon (probably this week). 

But if it does not, we may see a sudden and rapid deterioration and...a restart of an upward trend in precious metals.

Chart Of The Day - Trend Following In Action

Today just one chart illustrating how "Trend following approach" works:

Facebook:

source: Stockcharts.com

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US Stocks - Is It A Healthy Bull Market?

Although NASDAQ is making new historical highs, the market internals do not support these tops. Look at the chart below:

source: Stockcharts.com

The lower panel of the chart shows the amount of stocks establishing new 52-week highs. Note that despite the index making new all-time highs (the blue arrrow on the upper panel of the chart), the amount of stocks doing the same is rapidly going down (the red arrow).

Well, it is not a typical pattern printed by a healthy bull market...

Are We In A Bear Or Bull Market In Precious Metals?

The gold market looks like being in a typical short-term bear cycle:

The green line indicates that since middle April 2018 the gold has been in a downward trend.

However, this chart says something different:

The chart shows a popular gold market performance measure, the gold / silver ratio. To remind you, during the furious bull markets in precious metals the ratio is going up. And vice versa  - during a bear market it goes down. The message delivered by the above picture is quite simple - the precious metals market is in a bull cycle.

And the last chart:

This time the chart shows another popular performance measure, the GDX / gold ratio. Once again, during a typical bull market in precious metals GDX (or gold mining companies) outperform the gold itself. The blue up-trending line evidences that the precious metals market is in its bull cycle.

So the question is: "Are we in a bear or bull market in precious metals?"

Latest Developments On The Precious Metals Market

We live in interesting times. Generally, gold and the US dollar go in the opposite directions but after the latest FED decision both instruments go in tandem:

source: stooq.com

What is more, most recently the silver / gold ratio exploded to the upside but gold still cannot break above an ultra short-term resistance at $1,307 - $1,310 per ounce (the red, dotted line on the lower panel of the chart):

source: Simple Digressions

Finally, JP Morgan is furiously hoarding silver:

source: Simple Digressions

I think there is something big in the making...