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The minor stalling out in US Equity indices after four straight days of gains doesn’t equate to any sort of market top, technically speaking, and near-term patterns remain bullish for the prospect of further gains back above 4133 in the days ahead.
As mentioned previously, the entire bearish argument for investors doubting Technology’s rally depends on SPX holding under 4200 and QQQ remaining under $326. Any move over these levels would arguably result in immediate sharp upside follow-through in the weeks ahead and would likely postpone any larger consolidation until the seasonally weak month of May.
Cycle composite projections for both NYSE Composite along with $AAPL show the possibility of a peak between 4/11 – 4/14. My relative chart of $QQQ vs. $SPY also shows the possibility of an upcoming exhaustion signal, which could occur on further outperformance by QQQ vs. SPY between now and early next week. At present, it’s still right to favor QQQ outperformance, and I do not feel that the recent weakness is all that important, and expect a return back to new weekly highs.
As the hourly chart shows below, this minor “backing and filling” looks to be consolidation only, which hasn’t done much damage. Wave structure argues that this could be a possible fourth wave of the most recent rally pattern from 3/24 lows. This would allow for some strength on Wednesday potentially into Friday before a stalling out into next week.
Silver-and Gold make bullish technical breakouts; Silver has broken its two-year downtrend
Silver has rapidly caught up with Gold in recent weeks, and Tuesday’s gains have carried this to the highest levels in nearly a year.
As weekly charts show below, this strength has not only exceeded early year highs, but also managed to successfully surpass downtrends beginning in Spring of 2021.
Most times when a breakout has two or more areas of significance that are exceeded, it adds to the attractiveness of a given move. This week’s gains are quite bullish for Gold and for Silver.
It’s important to note that this rally has largely been ongoing since Fall of 2022. Thus, while the near-term breakout back to new all-time highs is certainly constructive, we’ll likely see this rally peak out in late Spring, before moving back to new all-time highs right away.
Weekly cycles show the Metals to bottom in Summer 2023 before a very strong intermediate-term rally back to new all-time highs.
In the short run, I expect the next meaningful area of resistance for Silver to materialize near March 2022 highs near $27. This would allow for the first rally from September 2022 to January 2023 to equal the second rally in price points gained, from March 2023.
Short-term exhaustion might happen in late April/May coinciding with a bottoming in Treasury yields and the US Dollar. However, this looks clearly early for now, and both Gold and Silver look promising for further gains.
Intermediate-term targets for Gold and Silver over the next 8-12 months should materialize near $2500, and $35, respectively, in my opinion.
$GLD, IAU look to be vehicles which correspond to Gold while $SLV is the Ishares Silver Trust.
Metals ETF’s to consider revolve around $GDX for Gold Miners, while $SIL, or $SILJ look preferred for Silver.
Silver preferred over Gold as precious metals breakout shows follow-through
Relative charts of $SLV vs. $GLD in Symbolik allow one to see uptrends and downtrends in the ratio of Silver vs. Gold, which can be quite helpful for positioning.
Following periods of underperformance in the relationship of Silver vs. Gold in early 2022 as well as early 2023, this shifted rapidly about two weeks ago to favor Silver over Gold.
This relative ratio broke out above the downtrend from late December 2022 after 2.5 months of underperformance in Silver.
Silver is now trending higher sharply vs. Gold and should be favored over the next couple months. If/when this starts to stall and/or reverse and the uptrend from mid-March is violated, this would suggest that Gold yet again might be able to start to outperform.
Ethereum looks to be taking the lead over Bitcoin, breaking out to the highest levels since last Fall
Ethereum’s bullish breakout has carried prices to the highest levels on a closing basis since last August. Following nearly three weeks of sideways consolidation, Tuesday’s rally above last Friday’s highs of $1846.56 looks appealing as a technical breakout which should result in an upcoming test of $2030, with intermediate-term targets near $2400.
Volume has been supportive of rallies back in mid-March, and $ETH has exceeded a multi-week period of consolidation vs. $BTC, as well. Momentum gauges are positively sloped, and not overbought and should allow for further progress in the weeks ahead.
Overall, after some meaningful downdraft in $ETH in recent months, this week’s progress looks to be helping ETH turn the corner and begin to show some much-needed strength. Pullbacks should be used to buy dips after today’s breakout, I believe, and only a daily close back under $1700 would postpone the rally.
