GLD/SLV Update

On March 22nd I posted a positive divergence in GLD and SLV as well as the miners, favoring the junior miners, GDXJ. I said at the time, it wasn't a huge positive divergence and there is still the matter of the longer term trend in GLD which is questionable, but I though we may get up to a swing length trade (up to a couple of weeks) out of GLD. GLD pulled back with the market on the 27th last week and on March 28th in this update, I posted I thought the pullback was ending and GLD would start a new leg up.

So far, so good. Here's what I was seeing on March 28th.

 The short term 5 min chart was starting to go positive on 3C.

 Typically on a new move, the first pullback is to the 10-day moving average as a general rule of thumb, on the 28th and 29th, GLD found closing support at the 10-day moving average above.

 The 15 min chart showing the first pullback since I had made the first long call in GLD, was also showing a positive divergence suggesting there was some accumulation in to the pullback, this is what I look for on pullbacks to the 10-day moving average to get a better feel as to whether support will be found there.

The hourly chart actually improved from where the initial long call was made as it remained in a leading positive position through the pullback.

Since then, GLD has moved higher along with SLV, GDX and GDXJ.

Here's what the charts are looking like now as the highs that were attained before the pullback will be the first real test of significant resistance.

 GLD 60 min, the 22nd was a head fake move below support, remember that head fake moves are the last thing we generally see about 80+% of the time before a reversal, GLD reversed after the head fake move that same day, crossing back above resistance. The idea here is a simple shakeout, the market maker or whoever, can grab the shares on the cheap as they have the total order flow book and have a good idea of which way the stock will be heading. It's an easy way for them to stock up on the cheap and add some momentum to the move. The 60 min chart looks pretty good except that 3C is at the reversal highs, which in GLD's case, is ok as price has not reached the same highs yet. Looking at GLD ALONE on this chart, I'd say it looks like it wants to consolidate again and has a decent chance of moving up to support and a pretty good chance of moving through it, but this is the longest intraday chart and takes the longest to react to changes.

 The 30 min chart is in the exact same situation.

 Here's what I don't like, the 15 min chart has been showing a negative divergence since the turnaround on the 29th, I think in my opinion, it's too early to see this kind of divergence on this long on an intraday timeframe, if GLD was at resistance from last week's highs, then maybe, but as it stands, this is something I don't like seeing and need to watch to see if there's deterioration on the next longest timeframe of the 30 min chart.

 The 2 min chart shows this negative divergence as well

 And since the accumulation on the pullback, the 1 min chart, especially today, is showing the same negative divergence. Now this could be a lateral consolidation, prepping for a run at resistance, but the fact it has reached the 15 min chart so quickly is something I don't like.

As for the miners, I'm covering GDXJ which I think looks a little better then GDX (Junior miners vs regular Miners).

 The 60 min chart here has a strong positive divergence , again note the head fake move in the yellow box. The real strength on this chart is the pullback on the 29th saw 3C much higher then the 27th's positive divergence, this is a leading positive, but once again, even though it is leading positive, 3C is stuck at the highs of last week before the pullback. All in all, again, looking at this chart ALONE, I like what I see and there may very well be a bigger accumulation cycle forming in GDXJ and perhaps the PMs as well.

 The 30 min chart looks a lot like GLD's in that it is leading positive, but stuck at the highs of last week, again GDXJ's longer term 30-60 min charts look even better then GLD's.

 The 15 min chart here is less troublesome, it is leading positive through last week's highs, so this needs to be watched to see if the 30 min chart sees this strength bleed in to the 30 min.

 The 2 min chart looks better then GLD's as it showed confirmation at the green arrow (3C moving higher with price), but again today there's a negative divergence. GDXJ is up over 2% and approaching the resistance area. This is what I think the GLD chart should look like, this makes sense.

 The 1 min action today intraday has been negative, again this suggests that GDXJ may want to pause and consolidate, laterally which is through time or pullback which is obviously through price, either will work (an example of a lateral consolidation would be a rectangle or triangle).

 SLV's 60 min doesn't look as solid as GLD/GDX, but it did put in the same positive divergence at the shakeout, the problem here is SLV HAS hit resistance from last week's highs and there's a negative divergence. Again, this is a 30 min chart and slower to react so it may yet still move in to a position of confirmation as 3C hasn't turned down yet today.

 The 30 min chart shows SLV just above resistance and seeing a negative divergence, 3C to confirm should be at the same level as the red trendline.

 The same problem on the 15 min, although it too has yet to turn down so it may still confirm.

The 1 min chart looks as I would suspect for just hitting resistance, I would think a consolidation would be in order, whether that happens or not, it's hard to say and it could happen above resistance or below resistance.

So there's a bit of a dichotomy as the longer term charts for the most part look pretty good whereas the short to mid term charts don't look as good. GDXJ looks the best as of now.

I'm not seeing enough evidence to suggest these can't move higher, I am seeing some trouble that I don't think should be showing up this early, but SLV reaching resistance may be putting pressure on GLD/GDXJ.

They need to be monitored at this crucial juncture.

One reason I think we are seeing resistance other then the fact there is resistance in the area is the inverse correlation with the dollar.

Here's the dollar intraday.

It fell through the morning lending support to almost all risk assets from stocks to the precious metals, but recently put in a tweezer bottom. Since this capture, the dollar has moved sideways and that is going to put pressure on the commodities incl. the PM's.

I do like the longer term chart's improvement in most cases, it will be a matter of seeing whether it holds .

I think for the moment, the PMs are in an area they may be forced to consolidate.