It looks we could see a correction in the US stocks too. We’ve been seeing it in other markets already. I still think this could only be a correction within a secular bull market and I don’t want to be calling for a 2008 style crisis yet however it can always evolve into something bigger.
There is an interesting rotation happening right now though. Gold has been a mess in the past months and even years. Many were expecting it would start trending higher. I was one of them for some time but I’ve put that thesis aside until now. I’m starting to see reasons for joining the party! What if this correction in the US stocks will ignite it?
Let me get straight into it. One of the reasons for gold being a mess was an under performance vs stocks. What if this is changing now? Let’s take a look at a daily relative performance chart.
We just saw a failed breakdown below 2015 low with a very obvious positive momentum divergence. I don’t know guys, but that’s positive in my book.
Let’s now take a look at a daily chart of gold miners GDX ETF.
Very similar picture here. A break below 2017 low with a positive momentum divergence and an inverted head & shoulders bottoming pattern with a huge breakout candle higher.
Could this be the start of something big? Could gold get to $1350ish level and breakout higher to start a new bull trend? Its a long long way to there so let’s take it easy here and go step by step. For now let’s just say that I wouldn’t exclude this chance but gold futures need to stay above $1215 and gold miners GDX need to stay above $19.15. And start moving higher of course.
Let’s see if this time gold has what it takes to use this ‘golden’ opportunity.