08Apr10:39 amEST

It's Time to Turn the Amen Corner

While it certainly turned out to be a choppy final few weeks of March for precious miners, there are two bullish aspects about the complex worth noting right now: 1) Very few market players and pundits are gung-ho bullish on the group, for obvious reason--The precious miners have been heartbreakers for a good while now. It is simply too easy to take a pass on playing the group altogether, what with the wildcard of inflation and The Fed, among others. I view this as a contrarian bullish sentiment gauge, given the lack of cheerleading. 2) The consolidation in the precious miners, keying off the GDXJ ETF daily chart, below, shows declining volume during the chop (bottom pane). This strikes me as bullish, as even though it was choppy, heavy sellers did not materialize. 

And now we have the complex, including platinum and palladium, off to a strong start this morning headed into a CPI print next Tuesday morning. 

Simply put, now is the time for the group to turn the corner, if they are going to do it. GDXJ has been basing above its 200-day simple moving average (yellow line), which stands in stark contrast to prior times above it where it folded miserably. Similar comments apply to silver and the silver miners.

Finally, the issue of the strong U.S. Dollar is relevant. Typically, there can be an inverse relationship between the Dollar and gold. But when gold can shrug off Dollar strength like it largely has done of late, I take notice. And given the bullish setup below, I think the real issue is that the Dollar may be rising against other currencies (Yen!) but certainly not versus commodities in this inflationary world. 

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