• 204 days Could Crypto Overtake Traditional Investment?
  • 209 days Americans Still Quitting Jobs At Record Pace
  • 211 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 214 days Is The Dollar Too Strong?
  • 214 days Big Tech Disappoints Investors on Earnings Calls
  • 215 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 217 days China Is Quietly Trying To Distance Itself From Russia
  • 217 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 221 days Crypto Investors Won Big In 2021
  • 221 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 222 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 224 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 225 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 228 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 229 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 229 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 231 days Are NFTs About To Take Over Gaming?
  • 232 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 235 days What’s Causing Inflation In The United States?
  • 236 days Intel Joins Russian Exodus as Chip Shortage Digs In
  1. Home
  2. Markets
  3. Other

It May Be Time to Book Some Profits in the Mining Stocks

It's been a great run over the last two months but it may be time to tighten stops on mining stocks. You can see in the chart below that at least during this stage of the new C-wave gold is still inversely tethered to the dollar index, as are miners.

US Dollar Index

During the period from September 2011 to July 2012 the dollar was moving generally higher out of its three year cycle low and that forced a 10 month correction in the precious metals sector.

It's been my opinion that the three year cycle in the dollar topped at that point, and should drift generally lower until the next three year cycle low sometime in mid-2014 (with occasional counter trend rallies from time to time).

I've been expecting one more leg down in the dollar to test the February intermediate low before the first counter trend rally.

US Dollar Index

However, this bounce is now on the 10th day and in jeopardy of generating a right translated daily cycle (a cycle that rallies longer than half its duration and tends to form higher highs and higher lows).

If a right translated daily cycle occurs it will probably signal that an intermediate degree counter trend rally has already begun. As you can see in the chart above just as soon as the dollar started to rally gold stagnated, mining stocks started to correct, as did the stock market.

If this bounce in the dollar turns into a full-fledged intermediate degree rally then we can probably expect a 3-4 week correction in asset markets.

I find it hard to believe that Bernanke is going to allow the dollar to rise and asset markets correct right in front of an election but the possibility definitely exists if the dollar doesn't turn down early next week.

Those of you not willing to hold through a 10-15% correction in miners should probably consider tightening stops, possibly right below Thursday's intraday low. If that stop level gets violated it would start a pattern of lower lows and lower highs which is generally the definition of a down trend.

If, on the other hand, Monday morning finds the dollar getting hit hard then I think we may see gold test $1900 before the next intermediate degree correction. In my opinion what happens Monday & Tuesday to the dollar index will probably set the stage for market direction over the next month and into the election.

 


SMT premium newsletter. $10 one week trial.

 

Back to homepage

Leave a comment

Leave a comment