Since the intra-day lows of February 11th, with the exception of T-bond prices, almost everything else is up sharply! You name it: Gold, silver, copper, crude oil, and stock prices are all higher over the last 16 trading days.
Mining stocks have been the star performers this year so far, with many individual mining shares posting gains of 100% or more since January 19th. The S&P 500 Index is up 10.5% since February 11th, while the Russell 2000 Index and the Nasdaq Composite are up 13.0% and 12.0% respectively.
The "tone change" from February 11th is nothing short of incredible. Many Wall Street pundits are already declaring an end to the "great correction" that chopped 15% off the S&P 500 Index from the intra-day high on November 3, 2015 to the intra-day low on February 11th, 2016. And maybe this newfound bullishness is justified? Who am I to argue with the herd?
However, an interesting sell signal was triggered by my computer trading system in most of the precious metals stocks at Friday's close, March 4th. Please see the Philadelphia Gold/Silver Mining Index (symbol XAU) daily chart below. Few would argue that this entire group has been on fire lately with most stocks doubling in a few short weeks, and maybe these hot stocks deserve a much needed rest to consolidate recent gains. Unfortunately for bulls, I suspect that there is more here than meets the eye. I think the Federal Reserve is about to make a huge mistake. While most market watchers now believe the Fed won't raise interest rates more than once over the rest of 2016, and that the next rate hike is unlikely until at least June (if then), I believe that rhetoric from Federal Reserve officials is about to become very unfriendly and that a 1/4-point rate hike could come as early as the upcoming March FOMC meeting. Wow, wouldn't that be a shocker!
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| Philadelphia Gold/Silver Stock Index (XAU) Daily Chart with Computer-generated Buy & Sell Signals |
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