The Metals Stocks And ETFs Weekly Report August 3, 2012

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 |  Includes: AG, AGQ, GLD, PHYS, SLW
by: Patrick MontesDeOca

by Patrick MontesDeOca

For U.S. markets this year, winter could mean a storm of volatility in the form of November elections, a government debt ceiling hit soon after, and the so-called "fiscal cliff" in 2013, as the Bush-era tax cuts come due to expire and several billions of dollars in mandatory budget cuts kick in.

As investors mark the Aug. 5 anniversary of the United States losing its triple-A rating from Standard & Poor's, they do so in a market that looks deep in summer slumber -- a big change from a year-ago.

In August and September 2011, market volatility spiked to levels reminiscent of the height of the U.S. financial crisis. By early October, the S&P 500 was flirting with a bear market. The debt downgrade, which came with the warning that more could be in store, followed weeks of watching congressional leaders play chicken with raising the country's debt ceiling and a feud over a deficit-cutting plan that few deemed deep enough. Read this recap of August 2011's wild ride.

The gold and silver markets started the week with high expectations of Mr. Bernanke to announce some kind of specific measure to be taken by the Federal Reserve with regards to QE3 or any form of economic stimuli for the U.S. economy. Without any specific formula or commitment to follow through from the Federal Reserve to implement any new and immediate measure, the yellow metal ended the week at $1.603 down $9 per ounce.

As we move into the third quarter of 2012, the world central planners continuing to kick the can down the road with regards to any worldwide resolution or concerted effort to stop the world economy from falling to a deeper and more painful and dangerous deflationary spiral.

The precious metals like gold are beginning to confirm some very bullish technical patterns. The gold chart may be entering the last stages of the completion of one of the strongest technical indicators called a descending falling wedge reversal. The Falling Wedge is a bullish pattern that begins wide at the top and contracts as prices move lower. This price action forms a cone that slopes down as the reaction highs and reaction lows converge. In contrast to symmetrical triangles, which have no definitive slope and no bias, falling wedges definitely slope down and have a bullish bias. However, this bullish bias cannot be realized until a resistance breakout.

This descending falling wedge reversal daily resistance level of $1,605 was broken on July 26, 2012. By using this work to forecast the upper end of the target range we can identify the $1,780 to $1,800 per ounce levels as the potential targets near term.

Let's take a look at some metals stocks and ETFs and see how they compared against the yellow metal.

GDX - Market Vectors Gold Miners

The GDX (Market Vectors Gold Miners) ETF closed at 42.86. The 52 week Range is: 39.08 - 66.98

The market closing above the 9 and 18 day MAs on a weekly negates previous bearish trend neutral to bullish. With the market closing above the VC Weekly Price Momentum Indicator of 42.64, it has negated the bearish sentiment to bullish.

Look to take some profits if long as we reach 44.17 and 45.53 levels early next week. Buy corrections to 41.31 and 39.75 levels to cover shorts and go long on a reversal stop. If long use the 39.75 levels as a SCO/GTC ( Stop Close Only and Good 'Till Cancelled order ).

PHYS - Sprott Physical Gold Trust ETV

The PHYS - Sprott Physical Gold Trust ETF closed at 13.95. The 52 week Range is: 13.03-16.86. The market closing above the 9 and 18 day MAs on a weekly basis is neutral to bullish. With the market closing at the VC Weekly Price Momentum Indicator of 13.95, it has negated the bearish momentum sentiment neutral to bullish.

Look to take some profits if long as we reach 14.12 to 14.30 levels next week. Buy corrections to 13.78 and 13.62 levels to cover shorts and go long on a reversal stop. If long, use the 13.62 levels as a SCO/GTC (Stop Close Only and Good 'Till Cancelled ).

GLD -SPDR Gold Trust ETF

The GLD - SPDR Gold Trust ETF closed at 155.55. The 52 week Range is: 148.27-185.85. The market closing above the 9 day MAs, on a weekly basis is neutral from bearish. With the market closing below the VC Weekly Price Momentum Indicator of 155.62, it has negated the bullish sentiment to bearish.

Look to take some profits if long as we reach 157.64 to 159.74 levels next week. Buy corrections to 153.53 and 151.52 levels to cover shorts and go long on a reversal stop. If long, use the 151.52 levels as a SCO/GTC ( Stop Close Only and Good 'Till Cancelled order).

AGQ - ProShares Ultra Silver

The AGQ - ProShares Ultra Silver closed at 38.54. The 52 week Range is: 34.45-127.08. The market closing below the 9 and 18 day MAs, on a weekly basis remains negates previous bearish trend neutral to bullish. With the market closing above the VC Weekly Price Momentum Indicator of 38.25, it has negated the bearish sentiment to bullish.

Look to take some profits if long as we reach 40.21 and 41.89 levels next week. Buy corrections to 36.58 and 34.63 levels to cover shorts and go long on a reversal stop. If long use the 34.63 levels as a SCO/GTC ( Stop Close Only and Good 'Till Canceled order).

AG - First Majestic Silver Corp.

The AG - First Majestic Silver Corp. closed at 16.16. The 52 week Range is: 12.12-25.56. The market closing above the 9 and 18 MAs on a weekly basis is neutral to bullish. With the market closing below the VC Weekly Price Momentum Indicator of 16.26, it has negated the bullish sentiment to bearish.

Look to take some profits if long as we reach the 16.93 and 17.70 level next week. Buy corrections to 15.49 and 14.82 levels to cover shorts and go long on a reversal stop. If long, use the 14.82 levels as a SCO/GTC ( Stop Close Only and Good 'Till Cancelled order).

SLW - Silver Wheaton Corp.

The Silver Wheaton Corp closed at 27.62. The 52 week Range is: 22.94 and 42.50. The market closing above the 9 and 18 day MAs on a weekly basis is neutral to bullish. With the market closing below the VC Weekly Price Momentum Indicator of 26.44, it has negated the bullish sentiment to bearish.

Look to take some profits if long as we reach the 28.54 and 29.45 levels next week. Buy corrections to 26.53 and 25.43 levels to cover shorts and go long on a reversal stop. If long use the 25.43 levels as a SCO/GTC ( Stop Close Only and Good 'Till Canceled order).

PSLV - Sprott Physical Silver Trust

The PSLV Sprott Physical Silver Trust closed at 11.31. The 52 week Range is: 10.87 and 21.83. With the market closing above the VC Weekly Price Momentum Indicator of 11.31, it has negated the bearish sentiment to bullish.

Look to take some profits if long as we reach the 11.50 and 11.70 levels next week. Buy corrections to 11.06 to 10.82 levels to cover shorts and go long on a reversal stop. If long use the 10.82 levels as a SCO/GTC ( Stop Close Only and Good 'Till Canceled order).

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AG, AGQ, SLW, SLV, PSLV, GDX, GLD over the next 72 hours.

Additional disclosure: Precious metals products trading involves significant risk of loss and is not suitable for everyone. Past performance is not necessarily indicative of future results.