The next report will be on Tuesday, April 1st.
Today’s report covers the commodity, bond and Bitcoin ETFs. Gold continues to lead the markets as it trades near all time highs. Copper is next in line as it goes parabolic and nears overbought levels. Bonds are confused with the TLT breaking down as IEF holds within a bullish consolidation. Bitcoin got an oversold bounce within a bigger downtrend and a bearish pattern is taking shape.
Report/Video Headlines
- Gold SPDR Remains in Beast Mode
- Gold Miners Hit New High as Silver Miners Surge
- Copper Goes Ballistic as DBB Struggles
- Copper Miners ETF Battles Breakout Zone
- DB Agriculture ETF Holds Short-term Breakout
- TLT Reverses Short-term Upswing
- Bitcoin Remains with Double Top and Downtrend
Gold SPDR Remains in Beast Mode
There is no change for the Gold SPDR (GLD). Gold is one of the strongest assets in the world right now. Stronger than US stocks, US Treasury bonds, crypto, real estate and other commodities. GLD remains in a leading uptrend with yet a new high last week. There is nothing new on the chart because GLD is in uncharted territory as it trades at all time highs. The only potential negative is that the ETF reached overbought territory as the PPO(1,200,0) exceeded 15%, which was also the case in April and October 2024. PPO(1,200,0) shows the percentage distance between the close (1-day EMA) and the 200-day EMA. Prior overbought readings gave way to a consolidation period to digest the gains. Overbought in an uptrend is not a bearish setup or signal. It simply means prices are extended and ripe for a rest.
The bottom window shows the PPO(1,200,0), which is the percentage difference between the close (1-day EMA) and the 200-day EMA. The last parameter (0) is the signal line, which is not needed for this example. I placed a pink line at 15% to mark overbought conditions, which occurred in April, late September, late October and now. While I prefer simple moving averages (SMAs) to exponential moving averages (EMAs), SharpCharts does not have an indicator to express the difference between two SMAs. StockCharts ACP does though. The PPO is based on EMAs. For signals and expressing overbought conditions, there is not a huge difference between EMAs and SMAs.
There is no change in the Silver ETF (SLV) as it extends on its late January breakout. Silver is positively correlated to gold, but also has an industrial use that makes is a hybrid metal. SLV corrected with a falling wedge that returned to the rising 200-day SMA in December and broke wedge resistance in late January. The ETF extended on this breakout and the odds favor a move to new highs. For support, I am using the breakout zone in the 27-28 area (blue shading), a break of which would call for a re-evaluation. The bottom window shows the PPO(1,200,0) at 9.9%, and not yet near overbought levels. SLV is much more volatile than GLD so I need to use a higher level to define overbought. SLV becomes overbought when the PPO(1,200,0) exceeds 20%. The pink vertical lines mark overbought conditions in April, May and October.
Gold Miners Hit New High as Silver Miners Surge
The Gold Miners ETF (GDX) is keeping pace with the Gold SPDR (GLD) as it surged to a new high in March. GDX is positively correlated to GLD, but more volatile and prone to wilder price swings. On the price chart, GDX broke out of a falling wedge in mid January and extended higher in February-March. I am marking a support zone in the 36-37 area. The middle window shows the price-relative hitting a new high as GDX outperforms the broader market. The bottom window shows the PPO(1,200,0) nearing overbought territory (20%) in mid March. Technically, the PPO did not exceed 20% so GDX has yet to become overbought. As the pink vertical lines show, prior overbought conditions led to pullbacks in May, July, August and September. The October overbought reading foreshadowed a deeper correction into yearend.
There is no change in the Silver Miners ETF (SIL). SIL surged in March and is on the cusp of a new high. Overall, I see a falling channel correction into January, a breakout in February, a falling flag into March and a flag breakout in early March. SIL is also above the rising 200-day SMA and in a long-term uptrend. The flag lows and 200-day SMA mark the first support zone to watch (blue shading). I am using the PPO(1,200,0) to define overbought conditions. SIL is more volatile and erratic than GDX, but I will leave the overbought level at 20%. The pink vertical lines show when the PPO exceeds 20%.
Copper Goes Parabolic as DBB Struggles
The Copper ETF (CPER) caught fire with a wedge breakout in early March and a surge to new highs this week. CPER is up over 30% this year and going parabolic, which can be dangerous. This move compares to the 38.5% surge from February to May 2024. Note that CPER became overbought in mid May as the PPO exceeded 20% and this foreshadowed an extended pullback. Despite a leading uptrend and parabolic move, the PPO(1,200,0) has yet to cross above 20% to signal an “official” overbought condition. It is close (19.15%). With CPER going parabolic and the PPO nearing overbought levels, risk looks elevated for this industrial metal. Note that copper is in the tariff cross-hairs, which means we can expect above average volatility and uncertainty.
The DB Base Metals ETF (DBB) is equal parts copper, aluminum and zinc. Copper is off to the races, but aluminum and zinc are largely flat over the last six months. There are roughly two periods on this chart. First, DBB surged from February to May 2024, which is when copper went parabolic. Second, DBB traded sideways the last nine months with a large triangle forming (gray dashed lines). The ETF is currently challenging the upper line. Within this triangle, DBB broke out of a falling wedge and this is the active bullish signal. This breakout remains valid because it has yet to be proven otherwise. The February-March lows mark support in the 18.50-19 area (blue shading). A break here would negate the wedge breakout and also break triangle support.
Copper Miners ETF Battles Breakout Zone
Before getting to the analysis, note that US based stocks (SCCO, FCX, MTAL) account for just 10% of the weighting in COPX. 35% are Canadian, 10% Australian and 9% Chinese. In addition, most copper mines are outside of the US. Yep, it is complicated. The Copper Miners ETF (COPX) is going for a breakout as it briefly exceeded the February high and 200-day SMA recently. This is a battle zone because COPX crossed the breakout level four times in the last two weeks. Overall, the chart shows lots of support in the 37-38 area (blue shading). A falling wedge formed into early March and COPX is attempting a breakout. A strong breakout should hold and prices should extend higher. As we saw in September-October, COPX broke out with a strong move, but this breakout failed as the ETF fell back below the 200-day SMA in early November. For the current situation, the breakout zone in the 40-41 area should hold and a close below 40 would show cold feet.
DB Agriculture ETF Holds Short-term Breakout
There is no change for the DB Agriculture ETF (DBA). The ETF is in a long-term uptrend and leading the stock market since December. Overall, DBA broke to new highs in November and extended higher into February. The ETF then retraced 50-61.8% of its October-February advance with a decline to the 25.5-26 area (blue shading). This area also marks support from the late December and early January lows. A steep falling flag formed with short-term resistance at 26.50 (pink line). DBA broke out with a pop in early March and this breakout is holding. A strong breakout should hold so I am watching 26 for signs of failure. A close below 26 would negate the short-term breakout.
TLT Reverses Short-term Upswing, but IEF Holds Up
The bond market is a bit of a mess because TLT reversed its short-term upswing and IEF is holding up. Tariffs are inflationary, which is bearish for bonds (higher rates). On the other hand, tariffs can weigh on economic growth, which is bullish for bonds (lower rates). The Fed may have to choose between fighting inflationary pressures or stimulating the economy. Watch the bond market for clues.
TLT appeared to break out with a surge in late February, but the ETF did not push above its December high and turned down in March. The chart shows a lower high from December to March, combined with a lower low from November to January (pink dashed lines). The January low was also a 52-week low. Based on these lower highs and lower lows, we can make the case for a long-term downtrend here. TLT advanced in January-February and reversed this swing with a breakdown on March 26th. Thus, the bigger trend is down since the early October breakdown. The short-term trend is now down with the late March breakdown. A close above 92 would call for a re-evaluation.
The next chart shows the 7-10 Yr Treasury Bond ETF (IEF) with a breakout in late February and a move above the December high (higher high). IEF became overbought after this surge and then consolidated with a pennant, which is a bullish continuation pattern. A breakout at 95.5 would signal a continuation higher. The breakout zone, pennant lows and January trendline mark a support zone in the 93.5-94 area (blue shading). A close below 93.5 would reverse this uptrend.
Bitcoin Remains with Double Top and Downtrend
The Bitcoin ETF (IBIT) remains in a downtrend with a confirmed Double Top. The ETF formed two highs in the 62 area (pink arcs) and broke the intermittent low with a sharp decline in late January. Broken support turns into the first resistance zone in the 52.5 area. Thus, a breakout at 52.5 is needed to negate the Double Top signal. Short-term, IBIT fell to 45 in early March, became oversold and bounced along with the stock market over the last two weeks. With an active Double Top reversal, I view this as a counter-trend bounce. A rising flag is taking shape and a break below 47.5 would reverse this short-term upswing. The next downside target would be the Bullish Setup Zone in the 38-40 area. The bottom window shows $BTCUSD with resistance at 93,000 and flag support at 82,500.
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