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fib_1618

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Well, as many of you have probably guessed by now, this month's update of the XAU/Yahoo advance/decline line shows that a solid sell signal was generated on February 15th and its been downhill ever since. Meanwhile, the price of gold has continued to break above its "3 layers of resistance" as reviewed in the thread of February 4th ( http://tinyurl.com/jlpnn62 ) with the 200 day EMA containing the price structure since that time until this past Thursday's break to the upside. Unfortunately for the bulls, when taken together, gold and silver's recent run up is that of an exhaustion move, and a sharp decline (reset) to or towards the $1190 level in gold is likely to start as soon as next week.

For investors, the current Precious Metals McClellan Summation Index is at a +543, so a "last ditch effort" rally by the PM stocks is likely to be seen (though from lower levels) before we see the actual counter trend top. This will probably coordinate with the mid month FED statement where the debt market is suggesting that no change in rates will be the outcome from the 2 day meeting. This will likely provide the underlying excitement that the FED will remain accomodative for a while longer, and by extension, this would be good news for the metals as additional liquidity would be added to the system.

So the bottom line for the metals this month remains basically the same as it was on January 29th: "the road traveled for the bulls should continue to be a bumpy one short term, but the path of least resistance, on an intermediate term basis, should continue to be a friendly one going into the second quarter of 2017". After that, well, the second quarter is likely to have a bearish slant to it as we go into our next likely buying opportunity around August.

Fib

[xauyahoo022417] 


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