Gold has done an amazing job of holding on to the sharp gains of the past week but suffered a bit of vertigo late in the overnight session. All metals had been considerably stronger earlier in the session but as the US dollar rallied off its low, most finished off their best. Even crude was better again despite my scepticism. Would feel a lot happier about the outlook on crude if the natural gas market was at least making an effort to scramble back up off its knees. Wheat market dreadful again.
I may not have made myself clear yesterday in my comments on the charts relating to the New York market. I mentioned that one alternative was that the SPX had rallied back up to the previous Fourth Wave. I should have been a bit more explicit. If the rally since the Christmas Eve massacre was simply a rally back up to the Fourth Wave peak, then the next step is to commence a Fifth Wave down. This looks to me to be the most likely outcome. It is all starting to look rather tired so I suspect at the very least we need a correction and then the question will be whether we can rally once more.
The XJO continues to struggle above 6100 and turned lower again yesterday. Banks are becoming a worry – again. To me the Banking Royal Commission was really a bit of a soft touch so if banks cannot get up off the floor now then there are other more serious problems for them in the future. It is beginning to look to me that we might need to think this through a bit more carefully. Once more it was our major miners that kept any semblance of order as BHP hit a seven-year high and RIO an eleven-year high. However we are seeing more and more of the majors and mid-cap industrial stocks meeting selling. I check the stocks that make up the 20 Leaders Index each day to see if they are trading above their 20 EMA. As recent as the 10th of this month there was only one stock that wasn’t positive – yesterday there were eight. Buying across the market is quietly disappearing except for a few situations and the resources area.
I had an email yesterday asking whether one should take profits on golds. Goodness this is a hard decision. My feeling is the same as it has been for quite some time – I believe we are going to see the gold price very much higher but it might take time so whether one is wanting to take profits is more of a decision about whether the investor can be patient bearing in mind at all times that no trend is set in stone – I might be wrong on my big view of the world and gold.
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