that this was the TOP of the market in metals. I only said that when it gets this good, it is time to become cautious. On that count, it would appear that I was entirely correct. But, to say that I called the top would be incorrect… if it should prove to be an intermediate term top, I only got lucky is all.
When you see stocks within one industry group start to rise in a parabolic upward fashion on considerably greater volume, such as I saw Wednesday… it’s time to become cautious. If, when you see that it is time to become cautious, and prices start to fall in any considerable manner, as we saw today… you probably should pull the trigger and take your profits, too. That’s what I was saying. So, is that what I did? Nope!
I’m not a trader, but an investor. I’ll hold what I have, and hope for a decline to set in such that I get to add more around a low-risk market entry opportunity in the metals, such as I noted at the very end of May, and first part of June. I’m of a very strong conviction, at this time, that I do not want to sell, but look to acquire more in this industry group, as I might get some signal to do so. That said, if this was the beginning of a correction/ consolidation in prices, I would thoroughly expect that traders bailed en mass, and left a rather high volume wake behind them. The charts will tell…
Sure enough, I find losers on volume in excess of the recent 50-day average in: ASM, MUX, FSM, SLW, PAAS, ABX, SLV and GLD.
But, others declined only on average volume, or less, as: SSRI, CDE, HL, PVG, RIC, AG, IAG, GDX, SGDM and AUY.
I see RGLD actually rose, and on massive volume, too… but why, when nothing else did?
Volume was not big, only 10% greater on average among all the holdings. The volume on a down day like today was lower than the 3 previous up days… so, it’s a net positive, indicating no threat to this young Bull.
There’s 2 interpretations of this market action. A.) Either the decline is only just getting started, so it has yet to pick up in earnest, but will do so… or, B.) This decline is not a threat, and not being taken seriously, and so, it is expected to be very short-lived, and shallow. The price movement of the metals overnight, and tomorrow, before the weekend, will likely show us which this will be. I’ll ride it out; hope to find support and technical signs of low-risk, and add more. You might want to sell, and hope for the same, so as to get back in… but, possibly run the risk of missing out on a great gain, should it suddenly erupt. What to do? What to do?!?!?
Friday morning 6:55 am, and gold is off $3.30… silver is up $.06. Nothing of real consequence, which means selling has not picked up, and any real correction has not truly begun. If it pauses for mere consolidation, then a new base would be being put in place for the next lift-off. We’ll look again, after the 4:00 pm close, and reevaluate over the weekend, if necessary.
Here’s to your accumulation of real wealth!
Harold F Crowell