Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Charts: Gold Miners Preparing for a Big Move?

By

The question is what direction they'll take.

PrintPRINT
Briefly: In my firm's opinion, short speculative positions in gold (half), silver (half), and mining stocks (full) are justified from the risk/reward perspective.
 
Generally, everything that we wrote in our previous alerts remains up to date -- precious metals are likely to move lower in the coming weeks. The thing that we would like to emphasize today is that even if we see an upward correction, it will likely not be anything more than just that -- a correction. Let's take a look at the mining stocks chart (charts courtesy of http://stockcharts.com).
 

 
Miners bounced after moving to the 61.8% Fibonacci retracement level, and no wonder -- the preceding decline had been quite sharp. We could have written that they paused, as the move higher was rather small. Tuesday's small upswing took place on very low volume, which suggests that we are right before a more significant move. The question is what direction miners will take.
 
The preceding short-term move was down, so based on the above chart, it's more likely that the next move will be to the downside as well. However, even if we see a move to $25 or so in the coming days, it will still look like a correction.
 
Why could we see a temporary move higher here?
 

 

 
The USD Index is about to reach its cyclical turning point. It's a tough call to determine the short-term action based on it, as the most recent move was horizontal -- the USD Index has been consolidating in the second half of March.
 
The move that preceded the consolidation had been up, so the next move is also likely to be up, especially since we are after long-term, medium-term, and short-term breakouts. However, on a very-short-term basis, we can't rule out a dip based on the turning point alone.
 
As mentioned previously, the situation in the precious metals market and in the USD Index is just as it was in the previous days. The USD Index is likely to move higher (even if it declines a bit in the first part of April) as it already paused after a short-term breakout, and when it does rally, we will likely see another slide in the precious metals sector.
 
Summary
 
Trading capital (our opinion): Short positions: gold (half), silver (half), and (full) mining stocks.
 
Stop-loss details:
 
Gold: $1,342
Silver: $20.85
Market Vectors Gold Miners ETF (NYSEARCA:GDX): $25.6
 
Long-term capital (our opinion): No positions.
Insurance capital (our opinion): Full position.

For the full version of this essay and more, visit Sunshine Profits' website.

Twitter: @SunshineProfits
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE