Gold got blown up in 2 days with respect to the short-term rally. Watch for gold to bottom before silver as we likely transition into a phase of gold leadership over silver. Key support is from the 1300 down to 1270.
A brief update to note HUI is now approaching the resistance level of 245 to 250 that we have been noting.
Updating the HUI symmetry plan, we see that this week’s candle is nearly perfect in its mirror image of the corresponding one from October. So all the miners need to do is finish out the week around current levels and our ‘picture analysis’ lives another week.
Well, our work of art kept to plan for another day. The two shaded candles are the corresponding candles of interest for this week.
One is a leadership breakout play in the form of quality royalty company Franco Nevada (FNV) noted for its imminent attempt at the trend line in an NFTRH Update early last week…
And the other is a bottoming formation in Agnico Eagle (AEM), which was noted in an Update on January 17.
Franco Nevada (FNV) is described as one of the best (if not the best) run precious metals royalty plays by people who seem to know their stuff, fundamentally. What I see is a quality royalty company that is above resistance (now support, green line) and at a critical trend line (blue), that was the former uptrend line out of the 2008 market liquidation.
I also see a zero + (green) MACD on this weekly chart. While many gold stocks have green MACD’s on daily charts, this weekly view is much more significant. Because technically at least, if FNV can hold above resistance and get above the blue line, it would be in a new cyclical bull market.
A lot of people hate charts because they do not predict anything and sometimes the chartist can come off more like a carnival sideshow barker than a serious market analyst. All those calls, warnings and targets… only to be wrong and have to revise, as if by magic.
But one thing charts can do is set very real parameters and rules. The new NFTRH key ETF chart service (added to the premium service at no extra charge) is purposely mechanical and rules based. It has been saying stock markets remain on bull signals and precious metals and commodities remain on bear signals. In a difficult market there is something to be said for rules.
They are now barfing quality like Franco Nevada, along with all the garbage that people have been puking up for months now. When the sector bottoms out of this destruction the rebound should be a turn and burn. FNV would set sights on the now declining EMA 50 as an initial bounce target.
Institutions are being forced to liquidate the good stuff and the coming sell out should signal the ending phase of this down leg. FNV is probably going to slam the thick support zone. Maybe even cut through it.
The sector is technically broken until some important upside resistance levels are taken out. HUI 460 sounded an alert 120 points ago and there have been several more levels breaking like twigs ever since.
The pukage in play now implies a good, hard trading opportunity is upcoming. But the institutions now getting forced into redemption need to calm down first. No urge to touch this just yet.
Royalty company Franco-Nevada (one I would consider a ‘quality’ item) did big volume on Friday and even put in a Hammer. Was that capitulation and opportunistic buying? Not sure. It has not even Fib’d 62% yet. But stocks like this are something to keep an eye on.