Gold stock sentiment indicator.
A good time to have a look at the macros, given recent market behaviour.
First up, a look at the Aussie gold price with the GOLD ETF used as a proxy.
Short term chart shows a nicely rising trend with follow through on the breakout.
Price closed at $234.70 on Friday. Support kicks in at $228.80. No resistance on this chart.
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A longer term chart for GOLD paints a different picture.
Resistance has kicked in but any reversal is straight back onto support.
On this chart the rising trend is dominant (been around longer, tested and held).
I like the fact price is following the rising trend up rather than the shorter falling trend down. Consolidating.
There is only one concern with this chart that suggests it may pull back to trend - the higher high has formed under the falling leg.
If it happens, a reversal will occur with a price of around A$2,370.
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The price of gold and divergence in stock prices is most apparent on the Accumulation/Distribution chart.
GOLD ETF is in accumulation and aggressively so with a significant spike. A very good sign.
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XGD short term chart shows the same characteristics as the shirt term gold price.
A nice breakout on a rising trend, with support at 6328.
Noticeably, stocks are being hit harder than the price of gold warrants.
No resistance on this chart.
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The longer term chart, once again, has a different set up.
This is probably the most important of the four charts as the falling trend is dominant.
There is room to move higher before resistance is hit. 5911 would see a reversal and no trend formed.
I expect 7,186 to be hit before 5,911 as everything else suggest we are in a bull market.
A reversal from above 7,186 to support would then confirm the rising trend.
This chart is something of an anomaly compared to those above.
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Believe it or not, stocks are in distribution which has recently turned down.
Here is the A/D chart for the XGD.
Quite a contrast to the ETF.
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Where does that leave us from a macro perspective?
There is room for a minor short term pull back in both gold and stock prices without causing any macro chart damage.
Stocks can clearly move higher before hitting resistance. Gold price is hitting resistance.
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Finally, here is the sentiment indicator.
On Thursday, sentiment was sitting on support. Friday saw it break down.
My concern is stocks are going to be sold off (capitulate) regardless of what the gold price does.
A bear trap appears to be unfolding.
This is similar to the March '20 capitulation and I am not sure how deep it is going to go.
There is one significant difference. Sentiment had 10% daily falls back in Feb/March. This time falls are more measured.
Watch producers for signs of a turn around.
At the moment, juniors are copping the brunt of this sell off - risk off.
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