Is There A Bullish Case For Gold?

Before I go into gold, some follow up on Semiconductors, Nasdaq, and the other members of the Modern Family.

Over the weekend, we wrote about sector rotation. The crowded space in tech saw many getting uncomfortable in that crowd.

SMH, the ETF for Semi’s crashed last Friday. Nasdaq and the FANG stocks took Semiconductor’s lead.

Meanwhile, the Russell 2000 made new all-time highs. Transportation and the Financials firmed. Even the infirmed Granny Retail (XRT) held onto the major support levels and turned green.

Expecting digestion in SMH, QQQs and the FANG stocks, instead Monday opened to lower lows. And although all recovered from their lowest intraday levels, they closed below Friday’s closing prices.

Simultaneously, although still firmly above support at 140, the Russell’s felt the pressure. So did Regional Banks, although it managed to hang on by the close to end unchanged from Friday’s closing prices.

Granny Retail kept up the optimism as if to say, “Mallrats, you done with online shopping yet?

Transportation closed the strongest. One more kick over 170 should keep that sector happy.

The Fed will have a tough decision to make. Raise the rates with underachieving inflation numbers yet confidence in the U.S. economy. Or keep the status quo given the volatile geo and domestic political situations.

Why then, would I offer you what some will consider bold analysis given the aforementioned?

Last week, gold rallied to just over $1298 an ounce. If you look at the weekly chart on the left, GLD sits in a bullish phase.

From a technical standpoint, gold miners tend to lead before gold makes a move higher. However, GDX, unlike GLD, sits in a warning phase. GDX is not currently leading.

What can we assess from that?

Provided GDX does not break below the 200 week moving average (solid line), best we can say right now is that GDX consolidates while GLD tries to dispel the GLD/GDX ratio theory that GDX must lead.