The metals declined today, and it was not an insignificant amount. As a result, our miners also took a hit, and they did not decline by any insignificant amount either. So, now we have to take a look, and we have to study the case. We have to ask a few questions. One being, is price support in danger, or broken? Is volume indicating that shareholders are getting spooked and dumping? Those are the questions; now here is my guess. I’m guessing that fear is likely rising. I’m guessing, with the % of price decline, being as big as it is, that volume grew. But, I don’t know anything yet. So, we need the charts. Let’s let them speak to us.
It starts with GLD. The gold ETF declined, but on light volume. Volume was a bit greater than Monday’s, but not so great as to be at all meaningful. Will that be the trend? It’s true of SLW, SLV, PVG, SGDM, SILJ and ABX, also.
Lower, but on expanding volume, and approaching support: RGLD, SGDJ, GDX, PAAS, HL, SSRI and CDE.
We’ve got broken support, Monday, with AG, and it is being joined Tuesday, now with FSM.
I’m certain that tension must be rising. Prices were hit pretty hard, generally speaking, all the gain that was realized last Wednesday, when this market popped, is gone. We’re coming right back to the last place of price support. Volume increased, but… Support, for all but 2 or maybe 3, is still in place. Volume thought greater than Monday’s, was still lower than both last Thursday’s and Friday’s! It was 24% below the 50-day average volume for all 16 symbols.
While we can see that a possible challenge is arising, it must still be deemed a bull market in correction, and it would still be the wiser position to be looking for a confirmation, follow-through rally to launch in this week… and only if we do not, and support is broken on volume, will a hurting time commence, and then it will be necessary to cut losses, preserve our capital, and look for the support that the 200-day moving average of price should provide.
Will tomorrow bring something new and different than what we’ve seen. And, FWIW, the chart patterns of both GLD and SLV, since 7/6 top for GLD, and 8/2 top in SLV, would be described by chart technicians as bullish wedge patterns, having a flat bottom, and a downward sloping top. These wedges are getting tighter, and are being compressed in such a way that they would normally breakout to the upside. This is likely to happen soon! May God gives us all good success!
Here’s to your accumulation of real wealth!
Harold F Crowell