Dave Erfle – Technical And Macro Outlook On US Equity Markets, Gold, GDX, GDXJ And Junior Mining Stocks
Dave Erfle, Founder of the Junior Miner Junky, joins us to outline the downward selling pressure in most markets here at the end of the week, and his technical outlook on the general markets and precious metals. With a retreat below recent support in the S&P 500, there is a real concern of a further selloff in US equities next week, and even a “Black Monday” type of scenario can’t be ruled out. This selling pressure is validation that the Fed continuing to hike rates to fight inflation is working on bringing down the demand side of the equation and was telegraphed to the markets at Powell’s speech at Jackson Hole.
As for the precious metals sector, we look at some technical support levels Dave is watching for in gold, GDX, and GDXJ as we head into next weeks monthly and quarterly close. While there is the setup for a further flash crash down in the PM sector, he doesn’t expect it to be a long protracted correction, and points out the 7 year cycles where gold has bottomed in 2001, 20008, 2015, and that we are due for one again here in 2022.
We review the current environment in the junior mining stocks, where the focus should be on companies that have quality management teams and 12 months of operating capital in the bank to continue work programs. Wrapping up, we discuss whether these low valuations in so many junior companies made encourage larger producers to acquire some of the smaller market cap companies, and Dave mentions that we may see more companies merge to strengthen their balance sheets, synergies, and value proposition.
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Couldn’t resist: https://postimg.cc/QK3bQFpm
Those gap downs usually have more downside. Good luck to you.
Thanks! For the pattern to play out, the gap closes soon and then sideways for awhile (somewhat like an appendix). Even if not, there is not much realistic downside, and it is a time rather than price problem.
As noted on the Weekend thread: now flat.
GLD filled its April 2020 gap.
https://stockcharts.com/h-sc/ui?s=GLD&p=W&yr=5&mn=0&dy=0&id=p75696690653&a=1251432714
GLD has retraced 50 percent of its move off the 2018 low so it is still up 37% versus “king” dollar…
https://stockcharts.com/h-sc/ui?s=GLD&p=W&yr=8&mn=0&dy=0&id=p04814196102&a=688605966
The parabolic dollar:
https://stockcharts.com/h-sc/ui?s=%24USD&p=W&yr=6&mn=0&dy=0&id=p68959143857&a=787551484
A Dollar Index pull back to about 108.8 is possible.
Rumor: BlackRock shot-caller tells Zelensky to negotiate.
This is definitely not ‘normal’:
Per Dima, no shelling in referendum areas.
https://www.youtube.com/watch?v=VuO1QunA-5I
Gold Price Action Hints of Brewing Stock Market Crash
David Erfle – Friday September 23rd, 2022
“Gold has had a tumultuous year to say the least. The safe-haven metal soared above long-term resistance at $2000 per ounce briefly in March after Russia began its military occupation in Ukraine, then sank below long-term support at $1700 this week as the Fed toughened its approach to repressing the highest inflation experienced in over 40 years.”
“Within the same timeframe, after repeatedly insisting rapidly rising inflation was transitory since late 2021, Fed Chair Jerome Powell and colleagues moved from an ultra-dovish zero-interest rate policy to expectations of a Fed Funds rate over 4.5% by year-end. This abrupt and about-face shift in monetary policy has the U.S. dollar trading at 20-year highs in parabolic fashion, keeping gold priced in the world’s reserve currency under severe pressure…”
https://mailchi.mp/669118ebb0ae/david-erfle-weekly-gold-miner-sector-op-ed-1601234
The crash risk is probably greater than it has been since 2008 but I still doubt that a genuine crash is likely. There will be big down days that cause a lot of fear but nothing like the ’29 crash of 48% in 10 weeks. The covid crash was 38% in 6 weeks and the action this year has already caused plenty of fear so sentiment is absolutely nothing like it was as the ’29 crash began. There’s little optimism at all today let alone the euphoria of the roaring twenties.
The Dow closed below its 200 week MA today. The first time that happened following the 2000 top the Dow turned around and rallied 20% in 2 months. In 1929, the 48% crash ended with its first plunge below that MA and price rallied 48% in the following 22 weeks as half of the crash was retraced.
I think the odds favor a protracted bear market that keeps most players frustrated and wrong over and over again as good bear markets tend to do but the next 2-3 months will probably not be nearly as bad as most seem to expect and just might be not bad at all.
https://stockcharts.com/h-sc/ui?s=%24INDU&p=W&yr=6&mn=0&dy=0&id=p85528738747
2000 top for comparison:
https://stockcharts.com/h-sc/ui?s=%24INDU&p=W&st=1996-09-23&en=2002-09-09&id=p70701113061
Bought JNUG at the close (4.3% of trading account). Remainder cash.