The Path of Least Credulity

The rotation into and sharp rallies in the global materials/energy complex, away from extended long-term leaders like FANG, HD, SBUX, even AWK, today needs to be monitored closely in the coming weeks for sustainability.

In front of the jobs number tomorrow morning it is also tough to draw too many conclusions, especially regarding precious metals and miners and their jaw-dropping rally. 

At first blush, it is easy to dismiss the move as just another in a long line of explosive bear market rallies which have previously been doomed and unraveled rather quickly. 

But a weekly chart bullish RSI divergence for a premier silver miner like SLW, below, should not be taken lightly by bears when price begins to drop hints of validating that signal. 

Ultimately, one of the first true tests of whether a bear market bottom is in place is if we see GLD and GDX begin to now hold or base along their respective 200-day moving averages as those reference points flatten out and eventually turn higher. 

But after several years of all of the obvious anti-Central Bank rhetoric by gold bugs rendered irrelevant as the metals and miners became the laughingstock of asset classes, one has to wonder where the path of least credulity is going forward for a complex with intrinsic value as The Fed perhaps embarks on a journey of admitting a major policy error and, by proxy, undermining their appearance of power and admitting just how beholden they are to the machinations of markets at-large.