The technical picture continues to be clearly bullish on Wall Street, at least as far as the large-cap benchmarks are concerned. Even the relatively weak Nasdaq is now very close to hitting a new all-time high. The S&P 500, the Dow, and the Nasdaq are all well above their 50-day moving averages, and the benchmarks are way above their rising 200-day moving averages as well. Small-caps lagged the broader market throughout the week, with the Russell 2000 still stuck in the vicinity of its 50-day moving average. However, the index is still well clear of its 200-day moving average despite its short-term technical weakness. The Volatility Index (VIX) continues to slowly drift lower, hitting a new recovery low below the 16 level this week, but the fear gauge still finished the week only a tad lower following a mid-week bounce. Our forecast is for periods of consolidation to occur the second half of April and May followed by overall strength and higher prices into end of the second quarter.
Special Metals Update:
Only a handful of mainstream analysts remain bullish on precious metals. The grueling seven month consolidation has conditioned and crushed investor sentiment as shown below.
Since the gold peak in the first week of August 2020, a major shift has occurred. In August and September, sentiment was so extremely bullish that most investors were just expecting a brief correction and reversal back to new highs. The exact opposite occurred and has now shifted investor and analyst sentiment to a bearish extreme. Most investors cannot simply envision any significant precious metals rally. They rely on mainstream financial headlines which are self serving to major Fed banks. With Bitcoin surging north of $60,000 with continuous press in the financial media, major crypto coins have garnered most of the attention. Our expectation is for major crypto coins to experience a very sharp correction into summer (some alt coins are still expected to rally) while precious metals produce a spectacular rally into the same time period. If you are a fundamental trader, expect many different headlines to be attached to the expected move. We may see any combination of geopolitical conflicts, reminders of $27 trillion in US debt, Yuan gold backed currency, central bank purchases, and inflation.
We have had many of our own members email us about shorting precious metals over the past month as they have witnessed many months of every price spike being sold into. This is the exact sentiment we see at turning points. Metals bottom differently than stocks and produce difficult consolidation periods. Smart metals traders have learned how to quickly adjust their own sentiment and implement a new mental paradigm as this change occurs. For new metals investors, this is a difficult process and many cannot simply envision an end to the bottoming process after many months of manipulation and price suppression. Why we put up with this suppression in the metal asset class is simple: The gains which can be achieved once price suppression ends by trading gold, silver and miners are spectacular. We are entering one of those time period right now. Different metal assets will lead at different times and we will navigate our Gold Members through this lucrative advance. We expect silver to have a spectacular move to $40-$60 over a 3-4 week period in the near future (reserved for Gold Members). Follow our Nightly Briefings closely the next 90 days for strategies, price targets, and turn dates. We use our AI, cycles, and sentiment to project profits for members. We refer to technical analysis and charting primarily as a lagging confirmation tool. If technical analysis is the only tool in your toolbox, strong results may be difficult to come by.
Different rallies in the metals field will produce different leaders. GDX has led this rally since early March. It produced a low with gold in early March but made a higher low, unlike gold, in late March which is highly bullish.
Weekly and monthly charts are lagging indicators but are powerful ‘buy’ signals once they occur. We can see a higher high produced in the monthly chart in GDX. We expect price to hold and be supported into month end. This is a highly bullish development.
Cup and handle patterns produce some of the most powerful moves. The longer the base the larger the space is the saying widely used on Wall Street. We have been in almost a decade long basing pattern for gold since the 2011 peak and are in the process of a trending move into 2024. There will be 6-7 month periods of price congestion like we just witnessed from August 2020 into March 2021.
We expect RSI to embed higher throughout most of the summer. As soon as RSI gets oversold, do not be alarmed during this rally. There will be some volatile 3-7 day consolidation periods along the way which we will attempt to time for Gold Members.
Gold, silver, and miners will all lead at some point in this metals advance. We are still offering a 14-day free trial for new members to participate in our premium service. The next 3-5 months should be a golden opportunity.