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Equities, Miners, and Commodities Are Nearing Major Turning Points

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The equity market is ever closer to a cyclical top, miners are about to retest a major bottom, and hard assets have a new catalyst.

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In recent weeks my firm has written about the decoupling or negative correlation between the equity market and mining equities. As the miners take a hard turn lower and the S&P 500 (INDEXSP:.INX) continues higher, this current trend is all the more obvious. At the same time, commodity prices have been in a cyclical bear and have struggled to gain traction. Our forecast for 2013 is for these cyclical trends to shift. It won't happen instantly but it will slowly evolve in the coming months and quarters. The equity market is ever closer to that cyclical top, miners are about to retest a major bottom, and hard assets have a new catalyst.

First let us take a look at the miners. From top to bottom we plot Market Vectors Gold Miners ETF (NYSEARCA:GDX), Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) (larger juniors), and iShares Silver Trust ETF (NYSEARCA:SIL) (silver miners). It doesn't take a technician to see where these markets are headed in the coming days. GDX will test $40, GDXJ will test $17 and SIL will test $19.50 and perhaps $17.



As we pen this, the S&P 500 is trading at 1501 and faces very strong 13-year resistance at 1550 as well as the all-time high at 1576. Look at the chart below. Does this look like a market you want to buy? How in the world will the market break past 13-year resistance, much less even sustain a breakout move after a four-year rally?


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No positions in stocks mentioned.

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