While the markets have used quarter end and the 200 day moving average as a springboard to greener pastures, Gold (SPDR Gold Trust: GLD) and Silver (ishares Silver Trust: SLV) have languished. This relative weakness shows up in the charts, as both metals are stuck in a wedge formation that should resolve in another leg down.
Further, this weakness coincides with an overbought market that has strong overhead resistance between 1335 and 1340 on the S&P 500 — and we’re almost there! Additionally, as previously written about here and here, the market is in a 1 to 4 month period of seasonal (Sell in May) and TD DeMark relative weakness that should stall this rally in short order. Be aware of a possible right shoulder forming on the S&P 500 (as shown below); this is for future reference, but keep it on your radar should overhead resistance repell the rally. Further downward pressure on equities will likely pull the metals down as well, producing a nice summer buying opportunity on both fronts. For more color on Gold and Silver, see previous articles How the US Became Tinseltown, Is Silver Giving the Dollar a Run For Its Money, and Silver Tech, In Pictures.
It’s volatile out there, so please remember to “leg” into purchases (buying portions). Create a shopping list and set pricing parameters. Better said, have a plan this summer and stick to it.
Happy Investing. Have a great 4th of July weekend.
Previously published as a blog by Minyanville.
No positions in any of the securities mentioned at time of publication.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of his employer or any other person or entity.