The overnight session might just get a little funky…
Earlier we were stuck wrapping our heads around a triple-tweet of Gold, VIX, and S&P 500 madness.
Tonight, we are looking at the charts, and thinking that something could be going on in those three realms.
First, we have this action in the S&P:
Now, I’m not a guy who likes taking risks, but something about that chart is telling me to move on. This one’s just not worth it. Sure, it seems like the powers that be are doing their darnedest to maintain the narrative, but those two bearish engulfing candles are downright nasty.
And the VIX is not looking that much better:
If volatility has been absent in 2017, it is absent no longer. Notice a triple trend developing in the fear trade.
First, volatility has room to run. Last week we said positioning was extreme, but tonight, this one can swoop in when we are least expecting it. Secondly, check out that 50-day moving average getting perky. The simple moving average is no longer moving lower. It has, in fact turned up and it slowly moving higher. Finally, look at that massive bearish move on the back of a massive bearish move. Now, when I’m talking about a bearish move, I’m talking about a spike in volatility, as in a rapid rise in the VIX. One thing we notice this time, however, is that the move is rapidly following the last spike higher. In fact, since mid-2016, any increase in volatility has been followed by a sharp decline and return to “all-clear”. Not this time, however. For whatever reason, fear in the market is just not letting go.
Moving on to gold, we notice the yellow metal is poised to make a run at $1300. Sure, we would have liked to see that today, but we weren’t counting on the paper carpet bombing between 10:00 and 11:00 a.m. EST. Either way, just since Tuesday, gold is $25 off the lows, and poised for a rally. If we punch through and close above $1300 tomorrow, that won’t just register on the daily chart, but also the weekly. Rest asssured the Fed and the ESF will be doing everything in their power not to see that outcome. Stack accordingly.
We would be remiss, however, if we didn’t mention the strong performance of copper and silver. We have been following these two like a hawk, firstly because copper is on a tear, and secondly, because silver, well, silver is kicking ass and taking names. I would not want to be in the way of either silver or copper. It doesn’t matter if I were a freight train. The pent-up energy is telling, and it is telling us that the “tag-your-it” back-and-forth between silver and copper has deeper, lasting impressions.
But don’t just take my word for it, see the back-and-forth for yourself:
Yesterday, we were asking if silver would catch up to copper, and today, we are asking if copper will catch up to silver. Very bullish signs and signals indeed.
And while the world is focused on international terrorism, domestic extremism, and stock market over-valuedness, things might be poised to come back down to earth, and if that happens, gold and silver will be headed for the moon…