We entered a bearish trade on the gold miners this morning on strength. We got a close under $26 which is the first step. We entered this trade a bit early but our A.I. is strongly suggesting a top will be struck Tuesday or Wednesday of this week. A smaller but somewhat reliable indicator is a full moon occurring today which is notorious for reversing golds recent trend. Certainly not a stand alone tool but just one of the many countless indicators we weight and look at. It is possible the miners will be supported until stocks roll over next week but not a certainty. The upside on GDX is limited so we wanted to position capital at current levels with a tight stop if wrong. We are expecting a fade of GDX into April 20-24 along with stocks.
Gold's move down into a cycle low of April 14th should occur mostly from week-end to early next week. However, erosion of share price will be witnessed this week. We expect virtually all of our indicators to give a screaming sell signal by Wednesday or Thursday .
The stock market is doing exactly what we forecast into this week, grinding out a higher high. It will be choppy and not straight up. The extent of this bounce may last as late as next Monday. We should then witness a strong pullback with the outside possibility of a lower low into the end of April. We will measure this weakness in the days to come and hone our forecast to include price targets for the coming pullback. This will be a back-the-truck-up moment which will give us an incredibly strong multi-week rally into early May.
Oil is expected to chop higher Into the end of April. However, if our pullback becomes a double bottom or a lower low than March 23rd, we would change our thinking on oil to a weaker bounce into month end. The Saudi-Russia oil spat will be settled out of best interest for the world. Trump loves cheap oil which is great for the consumer but kills US shale production. Most are not profitable with crude below $40 a barrel. Hence, there is a sweet-spot for oil which the world economies would like to see, $40-70. Expect oil to recover and inch higher with the stock market.