Precious Metals & General Market Review

May 2016 Issue #347.b

5-8-16

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"Moms Rock!"
Were heading into the seasonally merry months of May and June, where gold likes to peak and
pull back into early summer doldrums. General markets have issued bullish percent sell signals,
so we need to pay attention.

Golds putting in a small flag consolidation, more often than not, bullish. Money flow has room
to rise even further. The ADX signal remains bullish. The bullish percent has reached 94 in the
past, but over 70 presents heightened risk to be long. But it does have room to rise even further, if
it chooses so. The stochastic indicator is reaching an overbought condition.
Gold stocks, as measured by the GDX ETF, are riding up the 40 day simple moving average as
support. Current support comes in just under $22. Well watch that area during the next pullback.
The Federal Reserve is in a bit of a pickle. The economy doesnt appear to be strong enough to
raise rates in, as it transitions into the latter phase of the business cycle.
One and done this year?

Wherever the Yen is going, golds going too.

Gold also likes to travel along with oil, however the steepness of the ascent cant last that way
forever. At some point, price will fall out of the fork.

GLD appears to require a bit more sideways consolidating, perhaps even filling Fridays gap. It
likes to fill gaps.

Im a bit confused with the Aden Sisters current labeling. It has been my experience to label new
bull market rises off the bottom as A-rises, not C-rises.
Be that as it may, lets watch the RSI 50 area to see if gold can hold it while GLD consolidates
above the March high.
In other words, I think gold can move a bit higher before the next correction but dont hold me
to that.

I may break ranks with the Adens and label the gold rise differently. This being the A-rise, then
an upcoming B-decline into the 90 week EMA, and then a new C-rise up into the 2012 lows.
Future history will be the judge of that. For me, this makes more sense.
In the grand scheme of things, the recent rise hasnt been as big a deal as some folks make it out
to be. Look how deep and long the bear market was. The 2016 rise is a blip on the map.

Last week, the dollar caught a bid. If it starts rising again, that will place some pressure on gold.

Thats the fly in golds ointment. If the dollar rises, the Yen and gold fall.

The $NASI indicator went on a sell signal from a lofty altitude.

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The S&P 500 Index went on a $BPSPX sell signal.

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Im not interested in going long until stocks are really overbought. I have long term (years) equity
and fixed income exposure, but the shorter term account is in cash, which represents around 15%
cash.
I like to put cash to work when everyones freaking out. Its also better when the indicators, such
as the weekly stochastic and RSI, are in the oversold zones.

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The S&P 500 Index has been consolidating sideways for nearly a couple years between 18002100, and thats going to last longer.

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Ive repositioned the dome across many SPX charts on the Thirdeyeopentrades Public List at
Stockcharts.com.
This chart illustrates that resistance as well as how the 200 week exponential moving average has
acted as technical support this year. It suggests that one might keep some tinder dry for the
potential of another test.
Dips into moving average support along with an oversold stochastic and relative strength
indicator ought be embraced by one with some cash to put to work.
Equally so, rises into the dome ought be considered a logical place to raise cash and take profits.

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The red Andrews Pitchfork defines resistance nicely as well. You can see how 2100 is resistance
and will remain so until the bulls can break up thru that area.
Remember the 2040 stop from last year? Its back

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It showed up on Fridays two hour chart, so I added it to the public list. Its safe, short term, to
have gone long on Friday, so long as the SPX avoids a daily close below 2040.
But you decide.
We now have a sixty point trading range established between 2040-2100. My question is do we
have a right shoulder carving out next, with a neckline firmly established underneath?
Something to consider.

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This is a very interesting chart, exploring the echo of 2008 and the election/market cycle. It was
the end of a two term Presidency, and Hillary Clinton was rejected as a candidate.
Its now the end of President Obamas term and Hillary has returned (echo).
Everything changes yet nothing changes.
So, well see what the markets do. I suggest, for anything not long term, a stop under 2040. But,
you decide.

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Silver has strong technical support across $16.00. If it gets back there this summer, I think that
could be quite a gift for a buyer.
I think silver should hold the now rising 65 week EMA as support.

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The Global Manufacturing Purchasing Managers Index continues to decline. I dont see the
Federal Reserve raising rates in this environment.
Thats a scary looking chart for the beginning of the latter phase of the business cycle.

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Copper is having a tough go of it and may not be ready for prime time.

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Gold stocks are stretched, but I see the potential for as high as $30 before a correction sets in. At
some point theyll correct, and I think the 175 day exponential moving average would be a
reasonable area to watch for once that event kicks in this summer.
Right back into the March consolidation area, somewhere between $19-21. Thats where I would
like to load NUGT again. Other technicians are calling for more than a 62% pullback.
The bullish percent is on a sell signal, having whipsawed quite a bit. Thats a warning signal and
why I chose one fib grid to end at last weeks high.

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That being said, I could argue that GDX is still capable of doing a 5 wave up before a summer
correction. The moving averages relationship remains on a buy signal. Keep your eye on that.
Well, thats it for this weekend. Happy Mothers Day!

Thirdeyeopentrades wishes you Health, Wealth, Wisdom and Happiness!

Thirdeyeopentrades is not a registered financial advisory service and is not a broker dealer. We do not and cannot give
individualized market advice. The information in the newsletter is only intended for informational and educational
purposes. It should not be considered a solicitation of an offer or sale of any security. The reader assumes all risk when
trading in securities and Thirdeyeopentrades advises consulting a licensed professional financial advisor before
proceeding with any trade or idea presented in this newsletter. Thirdeyeopentrades may take a position and sell a
position in any security mentioned in this newsletter. We share our ideas and opinions for informational and
educational purposes only and expect the reader to perform due diligence before considering taking a position in any
security. That includes consulting with your own licensed professional financial advisor.

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