Wow, did I recently say that we have yet to see much volatility come into the precious metals markets? Well, it looks like it’s beginning to show up!
I was quite shocked to see such a rapid recovery in price as they did on Thursday. This would cause me to think that the volume, if it would be the best Bull Market confirming type of situation, would be higher than the smash on Wednesday. That would be encouraging. If volume were considerably less, than the recovery buying would appear to be timid. What will the charts say?
I should start by saying that the decline of Wednesday was 4.62% among the 19 symbols I have in a watchlist, whereas the Thursday recovery came back by an average of only 2.70%. That one thing already tempers my enthusiasm, and gives me some cause for concern. Secondly, the average volume did increase for Thursday. Should that give me hope? Well, it increased by only… 3.3%. No, that is not too particularly reassuring either. I’m not so sanguine now.
I begin with those that recovered in price, but on lower volume than seen in their decline, and lower than their average volume, which gives me no confidence: CDE, SLW, SSRI, FSM, PVG, RIC, PAAS, RGLD, AUY and GLD.
Others rose, and on decent volume that was above their average, but not greater than their Wednesday ‘smash’ volume. That’s somewhat encouraging, but doesn’t erase concern: HL, AG, GDX, SLV and ABX.
Now, I’ve got those that rose more than they fell, and on greater volume than their fall day. That IS encouraging, but there’s only 2: IAG and SGDM.
One, just one, fell on Thursday, and volume was pretty great. I need to look into the reason why to see if there as news about this one we need to know, and that would be ASM.
Another, the one I feared was in need of being sold after Wednesday, MUX, recovered in price well… back above my stop line, but volume was much lower than the sell-off, and even a bit below its average, so I still think it needs to be watched very carefully.
The overall impression, which I derive from charting the average of all 19 symbols as one, is that the price recovery was actually a good one, and the volume was only average, not great. Volatility has come to the market, and now our level of alertness needs to rise. It’s more likely to get worse, than better, and so we need to be prepared to jettison stocks and preserve profits… and, if we do that, we also need to pray that we get a good re-entry signal like the one the timer gave us back on the very end of May and first part of June!
After Thursday’s recovery, whereas I had been up as much as 61.5% recently, my miners are back to being ahead by 53%. Minutes before the market’s 9:30 open, gold is down $7, and silver off $.14. The miners will be opening lower as a result. Volatility is here, and it’s going to be a little rocky for awhile!
Here’s to your accumulation of real wealth!
Harold F Crowell