Sentry’s Gold and Silver Wrap – 25 APR

Gold is quite simply meandering higher and minding its own business while silver hogs the limelight. Gold is quiet and acts like it has all the time in the world and nothing to prove thank you very much. Another high was put in as price is obedient to the Bollinger band and is just staying inside. The break from 1476 has been smooth and continuous, with the big round 1500 number being breached. I do not for a minute believe that the market is done with 1500 and must be convinced that it deserves to fall away as support rather than resistance. I would be mildly surprised if gold did not at least attempt a re-test of the breakout level of 1476, now support. Following that, a time churning around the 1500 level, then off we go to 1600 and beyond. RSI is indicating an over-bought condition with a reading of 74. The MACD histogram is starting to drop off and stochastic is trying to roll over. As long as stochastic stays above 80, any pullbacks should be viewed as buying opportunities. In the event stochastic crosses the 80 level, the 18 day moving average (dashed gray) becomes the price target.

The Elder Impulse chart does a great job of showing changes in momentum and renders trading signals accordingly. Momentum is clearly on the decline as the 2nd blue bar has been painted on the chart. Blue signals exit from long positions and means that either the MACD histogram has turned taken on a negative slope or the 13 day exponential moving average (magenta) has taken on a negative slope. In this case it is the MACD histogram that has a shorter bar than on Friday, therefore a negative slope. If both 13 day EMA and MACD histogram take on a negative slope, then a red bar is painted and indicates a short position entry only if price is below the 65 day EMA, otherwise the red bar is ignored. I like to buy the blue bar at support. Support as discussed above is around 1475 and corresponds nicely to the 13 day EMA, where price has been reversing during corrections.

The longer term chart shows the breakout from a consolidation zone that formed over 6 months between 1320 and 1430. I expect the top of this zone will provide excellent and very strong support for any sustained correction in gold.

PHYS, the real gold bullion fund, finally decided to join the party breakout from resistance at 13.20. For the early move in gold, some of the premium was leaving PHYS and it underperformed. PHYS also appears to be leading gold in the loss of momentum and it is already testing the breakout level and support. The up trend remains intact as long as the swing low at 13.20 is not taken out to the down side.RSI just barely kissed 70 and is heading lower. The beat down from 13.75 was rather dramatic looking but occurred with tepid volume, not a concern. Price has been outside of the Bollinger band for 6 days straight and it should surprise nobody that it is pulling back inside the bands. The premium in this fund will eventually climb just as it sibling PSLV. Steady a she goes and buy weakness.

There’s the blue bar on the Elder Impulse chart telling us momentum is waning. Traders would use this as an exit point for speculative long trades, while investors will start paying attention for a buying opportunity and hold their outstanding positions.

Oh Silver! Not giving us traders a lot of opportunity for low risk entries! The last swing low is 39.72! A buy at these levels is not technically wrong until that point and signifies a Hellacious amount of trading risk. A pull back would be appreciated by me for sure in order to cut some of that potential loss while waiting to see a reversal higher. Resistance is going to be the high today near 50, with support coming from the last resistance level now turned into support at 41.93. Also the 18 day moving average is climbing up and will also be a support for price, currently at 40.79. RSI is completely off the chart at 88.75 and signifies a hugely over-bought market. This market needs a pullback to at least 45 and I would love to see a test of 42. I would buy like no tomorrow there! Stochastic is hooking over but will need a large pullback to lose embedded status (3 days or more above 80). All pullbacks should be viewed as buying opportunities as long as stochastic is embedded.

The Elder Impulse is still green and indicating that this market is still showing up side momentum. A blue bar will likely develop on any weakness tomorrow as the MACD histogram is almost totally flattened off. A shorter histogram bar tomorrow will produce a negative slope on the histogram, and with a positive slope on the 13 day EMA, will render a blue bar. For traders this will signal exit from long positions and reload for the next buy signal.

This longer term chart shows where we have come from. Wow! Look at the RSI level and how it is currently higher than it has been for a very long time! Notice the break out of the top of the trend channel. This will eventually come back down into the channel where sustainable progress can be maintained.

Want some perspective in silver? Well here you go! Can you say rhino horn? Jim Sinclair says sell the rhino horn and buy the waterfall. This is a textbook parabolic move. Each trend line violated to the upside with increasing slope. A correction is coming to silver, sooner or later. The only significant support exists all the way down near 31! The Fibonacci 38.2% retrace is all the way down at 37.59. It would be a gift from heaven to see a waterfall develop and take us back there again. The ultimate BTFD! As Turd Fergusen says, “just buy the fucking dip.”

PSLV, the real silver bullion fund, looks a lot like the Comex silver chart with a few differences. Some of the premium is coming out of price and the premium to NAV has fallen to 18%. Therefore a rather nasty red candle has been painted. Also, RSI is further along in coming down after forming a Mount Vesuvius! Price is responding to the median line as resistance within the Andrew’s pitchfork. Support should come from the lower line. Stochastic is also closer to the 80 level and could threaten to cross. A loss of this embedded stochastic will suggest the nearest moving average as a target, in this case the 20 day (dashed gray). That price level corresponds nicely to support coming from the previous swing high at 19.11. To maintain the up trend, price could come all the way back to the previous swing low at 17.64. A pullback to the Fibonacci support at 18.62 would be a gift from the big guy upstairs. The 20 day moving average has done a great job in support, I would love to get the opportunity to buy there. Keep an eye out for opportunity!

As we probably thought, PSLV is now painting a blue bar on the Elder Impulse chart. The MACD histogram has taken on a negative slope and confirms that PSLV is leading comex silver lower and is losing momentum faster. Sure would love to buy at 19.11!

This entry was posted in Gold, PHYS, PSLV, Silver, Technical Analysis. Bookmark the permalink.

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