Thursday August 16, 2012
The exit pace out of bonds picked up yesterday as TLT collapsed through the 124 support level. The amazing thing is how little notice has been made of this in the financial press. At stock charts the analysts are still talking about how strong the dollar is, apparently not sensing potential dollar weakness after a confirmed move out of bonds by many investors.
GDXJ hit bottom when TLT topped at 132. Things happen at different speeds and all markets do not move at the same time. Indeed GDXJ has bounced around 20 while TLT fell out of bed the last two days.
Typical Commodity Fund - Silver Miners
Many of the commodity plays look like this. Richard Russell often notes that the market is a living, breathing entity. And since a chart represents millions of individual decisions, he is right about that. Look at the last three months of activity for SIL. SIL hit bottom in mid May as the CCI did as well in the lower panel. Since then SIL has made a series of higher lows. it twice vaulted the 50 day MA, made a slight higher low at 17, found buyers, and is back over the 50 and 87.5 (the mid point of the 50 and 125 MA) moving averages. The 50 and 87.5 are flattening out. But if you look closely the 200 and 162 are flattening out as well. It is a matter of time until the crowd and their computers become convinced that GDXJ will stay above the 50 day MA. It will then find buyers at this new higher level.
Patience, it's the summer doldrums and tomorrow is options expiration.
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