The Bounce Didn’t Last

All markets were looking good the previous weekend…but their actions were to the contrary in the week just past.  Relentless weakness set in so hard that I had to go back to a cash position for a couple days. However, Friday saw some great “V” bottom type of patterns emerge. Consequently, I’m moving back into a few stocks now for a bounce.

It’s never fun when such fast corrections come. However, they do come…and all you can do is deal with them and be ready for the next setup and move.

The metals hit resistance levels. And as often happens, they overshot those resistance levels and are now moving back below them which is a short sell signal.

Let’s take a look at the precious metals and see where we should find support next.

Gold gained 1.4% for the week…and then backed away very predictably off resistance levels.

The 50-day moving average at $1,220 was perfect resistance for gold…and now we are moving back below the $1,220 resistance level where many subscribers shorted gold Friday.

The big counter-trend rally that was sparked by Fed speak looks to be over now.  I mentioned last weekend that rallies on Fed speak generally don’t last long in the golden realm.

Support still sits at $1,180 and then below at $1,140…so we just have to watch and see how gold behaves in those areas. 

Every evening I’ll tell subscribers what I see in detail…and they can play it accordingly. But for now, being short is the play.

Silver gained 1.46% for the week and found resistance at $17.50 before showing signs of rolling over now.

Gold is leading silver for the time being.

A move under $16.75 is the short level for silver and it’s got moving average support at $16.50 and below that is $16.

I may use a levered ETF to short some silver Monday as long as gold remains leading and looking weak.

Platinum saw a 0.25% rise over the past week and is also rolling over now.  $1,160 resistance was hit and is holding and as always, platinum follows gold so it looks like it has further to fall.

Minor support sits at $1,120. But if that breaks, platinum should head back into new low territory under $1,100 pretty quickly.

The dominant trend remains lower for the precious metals, while it is higher for stocks so shorting strength in the metals and buying dips in stocks remains the way to play it.

Palladium lost a hefty 5.04% this past week…and is demonstrating very weak action on heavy volume.

There is some good support at the $700 area. But at this decline rate, palladium will be there quickly.

My focus for subscribers this weekend is finding the stocks in the right sectors, which held up best and also those which are showing “V” bottom patterns which can produce large gains in very short order.

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