What a tangle! Stocks rose this week taking the Dow across the River 20,000 into the promised land. Dollar index continues to trend down, but slowly. Silver & gold took a hit this week -- gold fell the same percentage stocks rose -- but at the week's end gainsaid each other. Platinum & palladium blew hot & cold out of both sides of their mouths, rising strongly then passing slap out.
Dollar Index first: http://schrts.co/OkJ5UT
I have been calling this a megaphone top, but instead of falling through the bottom boundary, the Dollar Index has slid down it. Today it popped up 18 basis points (0.18%), but remains trapped beneath 100.75 support and both faster moving averages. RSI & MACD hint that the downtrend may be drawing to a close. None of that is heartening for metals.
Another possible harbinger of a renewed dollar rally are the other scrofulous fiat currencies, the yen and euro. Euro chart is here, http://schrts.co/qC4t1o
Y'all will notice first that in the last two days the euro has fallen through its uptrend line. Not fatal yet, but doesn't look good. Indicators are rolling over, too. Since the yen & euro are mere mirror images of the US dollar, their weakness whispers dollar strength.
Euro rose 0.14% today to $1.0697, but the yen fell 0.43%. Ow. Look, http://schrts.co/UuqBFa
Yen fell through its uptrend line today and nearly through its 20 DMA. Unless it catches footing on that 20 DMA Monday, it is destined for lower things.
The Dow pierced 20,000 on Wednesday, which shouldn't have surprised anyone. Odd thing is, that did NOT carry the Dow above the upper megaphone top boundary. See? http://schrts.co/Q6KUW0
Of course, it would be foolish to stand in the stock market's way right now. Overvalued & overbought can always was overvalueder and overboughter. Stocks can certainly rise more, maybe the rest of this quarter. Dow today subtracted 7.13 (0.04%) to 20,093.78. S&P500 shaved off 1.99 (0.09%) to 2,294.69
I ain't no more'n a nat'ral born durn fool from Tennessee trying to make my way through the world, but I heered about this thing called the VIX, the volatility index. Think of it as measuring smug complacency. When the VIX is low, stock investors are smugly confident things will keep churning along just as they always have. When they're panicked, VIX skyrockets. Looky here, http://schrts.co/8dXx2e
This VIX chart shows that investors haven't been this smug since July 2014. Whatta y'all reckon that means?
Dow in Gold chart lies right here, http://schrts.co/8dXx2e
It's fish or cut bait time for the DiG. After making what looks like a double top with December 2015, the DiG sank through support at the old top, then fell to the 50 DMA. Momentum indicators look set for it to move higher. Truth is, if it indeed bounces off that 50 DMA and rises through that resistance at 16.85 again, it could rise much higher.
Add to the bumfuzzlement the Dow in Silver, right here, http://schrts.co/u7ZjIe
The DiS looks more stoutly to have topped with double peaks about the same place, and a sharper fall of the top. Nor are the indicators as positive for the DiS as for the DiG.
What does it all mean? That's the problem, I can't tell you because silver's voice is talking over gold's.
And silver did that in the metals market today. Gold fell $1.4 (0.12%) to $1,188.40 but after silver fell off during the day it rallied back strongly to end up 28.6¢ (1.7%) at 1710¢
Silver was taking a licking down under 1680¢, and hit a low at 1668¢. Right there the buying kicked in, about noon-thirty, and within 30 minutes silver was sitting above 1715¢. At prices below 1670¢, clearly, somebody wants to buy silver.
Gold showed no such enthusiasm today, but after declining steadily the last five days, It turned up about 5:00 a.m. and left a bowl bottom on today's chart.
But let us cast a jaundiced eye on these proceedings. Fact remains that silver must conquer 1730¢ and gold $1,220. Otherwise they'll keep dropping or crabbing sideways.
Here's the gold chart, http://schrts.co/AW2KFe
Indicators promise more downward action, and gold has fallen back below that bowl lip to the 20 & 50 day moving averages nearby. This won't hurt anything as long as gold stays above the 50 DMA.
Y'all go look at the silver chart, http://schrts.co/o96FnV
All that trading, including the last two weeks, are consistent with an upside down head & shoulders. If so silver is now forming the right shoulder and could fall back as low as 1615¢, and mess around here another three weeks. Key interpreter remains 1725¢ support/resistance. Got to conquer that mark.
I sure don't recommend foot surgery as a form of entertainment, but I thank God mine went well on Wednesday. They hit me with something that knocked me clean out for three hours, and I was none too perky when I woke up. Thanks in large part to your prayers, the pain is very mild today. I just look silly in this boot with a wedge in the sole. Makes me peg leg around on my heel.
While I was doing foot surgery the printed version of At Home in Dogwood Mudhole Volume 3 arrived. One of my sons spent a couple of hours reading it last night and commented that he thought it had more love and thoughtfulness than the other two. Well, I hope I'm learning SOMETHING as I get older. Vol 3 is full of Susan stories. You'll find it here, http://bit.ly/2i7KakL
We've bundled all three volumes together here at a SALE price, http://bit.ly/2hPMBuv
Y'all enjoy your weekend.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger