On Monday we saw gold, silver, and other safety plays take a big hit when the stock market soared on positive vaccine news. But that rally has lost a bit of momentum and now gold is starting to firm up on support to enter a buy zone. Take a look at the chart.
Gold has support in the area of its 150-day moving average, currently sitting at $1847. It’s daily stochastics indicator is also oversold by having crossed below 20 like it last did in September.
The reason I think gold has little downside from here is that at the same time that it is sitting on support we got a buy signal for the TLT Treasury bond ETF on Thursday.
The daily stochastics indicator for TLT closed above 20 yesterday. It looks to me like this ETF is headed for its 150-day moving average, currently sitting around $163.35. I’m not interested in trading it, but I think it is worth noting. At the same time the US dollar index rallied on Monday, but has stalled out again already.
I think all of this means that we have a good buy point now in gold, silver, and mining stocks. It bodes well for my top stock pick for this month, which was up 4% yesterday, but is still close to its 50-day moving average, which could be used as a stop loss point.
In case you missed it I did a video on Wednesday in reaction to the Monday market moving vaccine news and my views on the overall market trends going forward from here. You can find it here.
-Mike
