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955 chart euro, vicino ad una bella trendline Pentothal | 05 set : 10:57

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Utente 20 ago : 15:45
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commento settimanale, GDX molto interessante

The malaise in equity markets continues but while we continue to drift down in Europe, US and EM equities are remarkably stable so far.The recent geopolitical wobbles favour Gold and gold stock, where we had the long waited move on the upside.

EQUITIES

EUROSTOXX 50

The index continues to drift down in a clear bear channel (lower highs, lower lows). We reached the upper boundary of my first target area (3360- 3350) last week and quickly reversed up from there but so far we have no signal on the short term timeframe that the market is ready to turn around.
In order to become more constructive we would need first of all a break of the channel on the upside, ie a weekly close above 3480. After that we need to clear the resistance area that has been created at 3520.
A quick look at the weekly chart shows the importance of this level: after moving below this threshold in June, the market has tried and failed twice to recover and both times we had a strongly negative week, with a closure at or around the low of the period.
The last week has produced an hammer candle which shows how the index is trying to build a bottom even if it failed once again to interrupt the lower lows sequence.

NASDAQ100

The Nasdaq index has recovered the drop of mid august and it is now moving into a sideways trading range. The SPX has a very similar behaviour so I won’t show that this week.
If we look at the higher timeframe, we can see how the weekly oscillator has been stuck into a triangle consolidation pattern; as always I will be monitoring a break of this pattern as a leading signal to understand where price should be moving next.
The US indices have been remarkably resilient: so far we have not seen any weakness, any correction (we haven’t even reached the 23.6% retracement level!), any spike in volatility. The market is very complacent, with the VIX is back again around 10. This does not fit well with the rally in bonds and gold nor with the increasing tension in global politics.
On top of this If we dig down we see another confirmation of this late cycle behaviour: global markets are narrow (ie few indices lead, the other lags) and within that few sectors are leading (Utilities and Tech in the USA).

GDX

A while ago I discussed gold stocks as an asset with potentially strong upside. GDX was stuck into a consolidating pattern (triangle) and my core scenario was one where the triangle was nothing more than the right shoulder of a very large head and shoulder pattern.
The recent geopolitical news surrounding North Korean nuclear experiments have triggered this long awaited signal. The first target is 31, where we have the neckline of a 4 year long head and shoulder bottom. This is a truly important pattern because of its length and of its symmetry. This is one the clearer patterns I have seen so far in financial markets and a textbook example of what a secular bottom looks like.
I always encourage people to look at things slowly, without making long term assessments which are in my experience extremely difficult to do when using technical analysis. Having said that, the potential target for this move is 48/49 which means a 100% return for this asset. Given the volatility of gold stocks, this is a totally achievable goal (they did more than that in early 2016 alone!) but it is sufficient to say that a position in gold and gold stocks today makes perfect sense from a technical analysis perspective.

FX
DXY

The US dollar has been in a clear bear trend since the beginning of the year. We have finally reached the first target at 92.4, a level that corresponds the 38.2% retracement of the previous bull market.
The market is very oversold and we also have a mild bullish divergence on the oscillator. Having said that, we don’t have any reliable reversal signal in place so I would be very careful in taking a contrarian position.