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Table of Contents

1. In-depth analysis of gold and silver

2. Gold Stock Analysis using GDX as the Proxy, as well as discussion of the BPGDM swing system

3. US Dollar, Unleaded Gasoline, Crude Oil, Agriculture ETF DBA, Copper

4. BPENER System, XLE and OIH, Coffee, Natural Gas

Comments:

First off I hope everyone enjoyed a nice long weekend!  The US cash Markets were closed on Monday in observance of Presidents Day, but of course the futures market all traded as well as foreign markets.  

In tonight's newsletter the first thing that I cover in-depth is the precious metals market since that market has been moving strongly to the downside, I will focus strongly on gold metal and GDX (gold stocks). As you know gold and gold stocks have been especially weak lately, which shouldn't be much of a surprise to you if you have been following our analysis.  Gold topped out in Aug 2011 and has been in a consolidation phase every since, however gold/silver stocks (also called p.m. stocks) have been much weaker than the metal for a long time, and has always been a negative sign for the metal.  

Below I discuss the short term technical view as well as the big picture scenario and what to look for.  Last week gold broke down from the small H&S pattern that I showed and is now near the lower trendline of the downtrend channel (charts 6 & 7).  One thing to keep an eye on over time is the 'Commercial Net' short for gold (chart 12) - it is finally starting to drop, however it still has a ways to go before it hits major bottoming levels.  Also longer term I wonder if gold will need to go through a more complex ABCWXY correction vs a simple ABC before it is ready to make new highs (chart 11)?  Silver of course had a bad week and lost a larger percentage than gold, -5.12% vs -3.43%, longer term watch the uptrend line from the 2008 lows (charts 18 and 19), shorter term silver is in a downtrend channel and logically sold off from the 61.8% Fib bounce (charts 21 & 22).

GDX, which is the gold miners ETF (gold/silver stocks) had a really bad week as it lost -5.74%.  Gold stocks have been lagging relative to the metal for quite some time, GDX is now nearing the July and May 2012 lows and is now testing the lower Bollinger Band (charts 25 - 29).  Our new GDX swing system based on the BPGDM (bullish percent gold miners index) is now at 16.67%.  The system has been short since Oct 12th, well over 4 months now!  Below I do a thorough analysis of the BPGDM and P&F charts.  (charts 31 - 33)

The last part of the newsletter covers the US Dollar and some general commodities (charts 35 to the end):  First off I look at unleaded gasoline (what you fill up your cars with), as you know gas at the pump has risen very rapidly recently.  Next I look at Crude Oil, then DBA which is the agriculture ETF (charts 43 - 46) - keep an eye on this one because the 144 Stochastic indicator has been below 20% for nearly 10 days on the 15 min chart which is quite rare, so the rubber band may be due to snap back.  I also take a look at the BPENER and XLE swing system as well as OIH and XLE.  Lastly I make some quick comments regarding Coffee (charts 53 - 56) and Natural Gas.

Matthew Frailey

Stock Earnings Calender:

Click here for a list of Stocks that are reporting Earnings

**Generally we never hold a position into earnings since the risk/reward is too great

Section 2. Gold Stock Analysis using GDX as the Proxy, as well as discussion of the BPGDM swing system

As you know, gold and especially gold stocks have been horrid lately.  The BPGDM still sits at 16.67%, remember bullish percent charts are calculated off a group/list of stocks that are still on a P&F buy signal within that list.  Bullish Percent charts can only trade in a range of 0% to 100% but rarely hit zero or 100% unless under extreme market conditions.

There are 30 p.m. stocks used to calculate the BPGDM and only 5 remain on P&F buy signals: AG, HL, NGD, NEM, and NSU.  Lets take a look at these 5 charts as P&F charts and see how close they are to turning over to a sell signal.  

The graphic above shows all 5 of these charts as P&F charts along with my comments on what price is needed to generate a P&F sell signal:

NEM - needs a close of $42.00 or below (currently sits at $43.27)

NGD - needs a close of $9.00 ore below (current sits at $9.61)

NSU - needs a close of $3.75 or below (currently sits at $3.79 so very close)

AG - needs a close of $16.50 or below (current sits at $17.21)

HL - needs a close of $3.75 or below (currently sits at $5.27 so far away)

Section 3. US Dollar, Unleaded Gasoline, Crude Oil, Agriculture ETF DBA

Section 4. BPENER System, XLE and OIH, Coffee, Natural Gas