Gold and silver maintain the bullish stance from last week and in fact silver goes really bullish by this indicator this week. Now of course, we are in the age of indicators mysteriously gone on the fritz so I guess that’s the caveat, if you want to call it one. Here’s silver…
Silver CoT
Have you noticed what crude oil has been doing lately? It has been forming in Inverted H&S pattern and the USO oil fund is breaking out today.
USO daily
We have been following this pattern over the last week in NFTRH, but there is a more important pattern by a big picture monthly chart that gets activated if today’s breakout holds. We have been following that one for many weeks.
Crude oil is of course a headline commodity subject to a lot of hype and noise. I believe the Fed has people reading charts and what is happening in Crude is not likely to be missed by them as FOMC market expectations management day draws nearer.
It’s pretty clear what silver’s immediate job is, isn’t it?
Silver daily, from NFTRH 241
While gold continues to offer no price protection (people who bought in say… 2003 or so might beg to differ 
) for weary casino refugees, it remains the value alternative to a gang of tramped out, played out and frankly, comical paper and digital notes issued by various governments.
These governments have been peddling little more than ‘trust’ since the macro play turned from productivity to a racket of ‘debt and confidence’ somewhere over the last couple or three decades.
For those who care, here is Uncle Buck’s latest status by daily chart.
US Dollar, daily
A Reverse Symmetrical Triangle has formed, which is normally a reversal pattern, which would mean from up to down. But USD is at a strong support area and is over sold.
USD, Euro, Yen, Aussie, Canada, weekly from NFTRH 242
The weekly view shows Uncle Buck still on a bull signal by the cross of the EMA 10 (green) over the EMA 35. But the Euro broke out of a little topping pattern. Ultimate upside for the Euro is 142 if it remains bullish.
The rest of the motley crew is self-explanatory as shown on the chart. Per the chart breakout I bought the Yen via FXY on Monday’s hard pullback, which means I own something that is inverse to the speculative playground that stock bulls have enjoyed for too long now.
As for the commodity currencies of Australia and Canada, the chart says it all. Aussie especially must find support here or else.
Lots to talk about and talk about it we shall – in depth in the letter – and as the mood strikes out here. We are grinding out a change of character in the markets. I want you to remember the bull wise guys that were touting at the exact wrong time with their “it’s a new secular bull market!” and “it’s a GREAT ROTATION out of bonds and into stocks!” (well, they got it half right) bullshit.
Going forward, understand who the promoters are (incl. in the gold “community”) and who the ‘just want to get it right’ people are. These are difficult markets and anyone touting dogma or pretending to be a genius is going to get ground up. We are all subject to screw ups (my hand is raised) but it is a clear attitude and a willingness to admit you don’t know it all that will see you through the current environment where everything it seems, is in motion in a frenetic way.
US dollar analysis-turned-screed over.
Here is the VIX chart from NFTRH 242 along with the words that accompanied it.
VIX daily from NFTRH 242
The VIX was stopped in its tracks by the bulls and painted another yellow oval. The hope for bears is that it remains above the 200-day averages or at worst, the 50’s. If you look closely, you will see that VIX has established a series of higher highs and higher lows out of March. This is a warning to stock bulls.
Here’s the VIX as it stands now…
VIX daily, current
Higher highs and higher lows, sneaky as they were, manifested in a hold of the moving averages, which is something the bulls have routinely not allowed to this point. Yes, I think the character of things is changing alright.
A couple weeks ago in NFTRH 241 we reviewed the bullish looking gold silver ratio (GSR) and noted a baby inverted H&S from which it is approaching a measured target.
Gold Silver Ratio, weekly
A relief phase, where silver out performs gold could kick in at any time. But then we also note that the big downtrend out of 2008′s blow off top was broken as the little H&S formed and resolved upward.
The bad news is that this indicates liquidity contraction and the worse news is that had better not be a big inverted H&S that has formed because if it is, it’s implication is not at all good for much of anything, including possibly even the prices of silver especially, and gold. Gold’s value is different from its price.
Price could drop considerably and incredible value could still be retained depending on what is happening around the barbarous anchor. Please get that concept about gold.
Let’s see if silver gets a turn to lead in the short term, but stay on alert for the big daddy inverted H&S. It is truly a concerning picture for most investments positively correlated to the economy. Sort of a gold-CCI ratio on steroids.