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Silver, gold fueled up for higher? S&P 500 crawl signaling danger?

Commentaries & Views

A couple of weeks ago, regarding the S&P, I suggested that participants could enter positions and “let the trendline be your guide.” Thus far, the index is holding above that trendline, with weekly momentum in the oversold position. Although I would stay on the long side of the trade right now, the fact that price is creeping along the trendline rather than taking a clear bounce off of it is reason to stay extremely frosty if in this trade, in my opinion.

If price gets above the July high, then I think the all-time highs have a high probability of being met. Of course, that would lead to a massive triangle formation and as regulars readers may know, those like to break to the flat side.

No big surprise, both gold and silver are continuing the run higher, with silver bulls now having recaptured the 200 week moving average.

As I noted on Monday, I still expect top trendline to be tested, and I am keeping an eye out for a breakout above it for a continuation to $30. I think there is plenty of fuel in the tank by way of momentum, with that coil in stochastics looking increasingly like an upside break will transpire. 

As for traders long from the prudent entries at $1900 gold and/or $22.30 silver; it stands to reason that there will be resistance at $1950 and $23.50 respectively, so once again the decision to take profit or hang on looms.

The gold to silver ratio, shown on the weekly time frame below, looks to be turning down yet again, at the third peak in a series of lower highs going to back to end of August. Note how momentum in the ratio is in the process of sputtering out again as well.

The chart of the ratio bodes very well for the stackers, in my opinion.

Thanks and have a nice day.

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