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Gold and Silver Looking Weak

Jan. 05, 2011 2:51 PM ETMNKTQ, DIS, GLD, SLV, TBT
Jeff Pierce profile picture
Jeff Pierce's Blog
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We got a downside break in the markets today, although by the close nearly all of the move was recovered, except on the Nasdaq where the losses were the greatest….all .38% of them. What I wanted to focus on is the action on the VIX, given that I expect the markets to break down in the coming days. Maybe it’s better to say I think it’s very plausible for weakness to occur in the coming weeks.

The VIX could be carving out some sort of bottom with constructive action that it could build off of tomorrow. Assuming that the 24th is the low, we then have a double bottom, with a gap up the following day. That puts the RSI over the 70 level and starts to trade in a rangebound fashion, never leaving the 17-18 range. If the markets start to move lower, this should push the VIX higher, giving it the energy to break out of this small range.

If we revisit the lows it will negate this pattern, but it wasn’t until I looked at the smaller timeframe on the VIX that I noticed this bullish pattern forming. I’m still trading the long site and bought AGU intraday and sold 1/2 afterhours when it popped in sympathy over MOS earnings, but continue to keep my trading very small for now.


SLV and GLD were both weak today and while they should bounce for a day or two, I think these markets are ready for an extended rest. I would be looking to short these when the RSI gets back near the 60 level on the 60 minute chart. That should occur right as it nears the gap on both of the charts below.


Disney break-out out of this wedge on high volume suggests this has room to run as it nears all time highs at $40.46

QCOR is a pullback play for those who have a longer timeframe. It would be Ok if it revisited the lower BB, but I would use a 2nd close outside this indicator as my stop. 14% of the float is short this stock and if this turns around and hits new highs that short covering should provide fuel for further gains.

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